for week ending 31 July 2009
Merv’s Daily Uranium Index
Market Data for Friday 31 July 2009
Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000.
Note that additional charts of the Daily and Weekly Indices were posted earlier and should be viewed during this commentary.
The week started out reacting from the third FAN trend line and ended with the Daily Index trapped inside the second and third FANS. We’re still waiting for some kind of trend resolution but if the action of uranium is any indication the resolution will not be all that great. The FAN PRINCIPLE still gives us hope for an upward thrust as that is what the breaking of the second (middle) FAN trend line suggested. However, we need the breaking of the third to confirm the upside move. Should this occur then initially we can look forward to a move to at least the FAN apex point, which isn’t really much of a move. The P&F chart posted earlier would give us a move to the 300 level. This was the projection on the break some time back and never nullified.
The Merv’s Daily Uranium Index closed Friday on a slight up note. It was ahead 1.22 points or 0.73% on the day. There were 24 winners, 13 losers and 13 that didn’t know what to do. I never like THAT many undecided but I guess it goes with the recent activity. As for those five largest stocks, Cameco gained 0.3%, First Uranium gained 1.6%, Paladin was one of those doing nothing, Uranium One lost 2.4% and USEC finally got some courage and advanced 8.4%. The best winner on the day was basically a tie between East Asia Minerals with a gain of 13.14% and Uracan with a gain of 13.16%. The worst performer was Purepoint Uranium with a daily loss of 10.3%.
For the week as a whole, the Merv’s Weekly Uranium Index closed down 80.17 points or 1.57%. The weekly winners and losers don’t reflect the mild overall weekly loss. There were only 11 winners but 34 losers and 5 going nowhere. For a one and a half percent decline one would not have expected such a large number of losers on the week. As for the five largest stocks, Cameco gained 0.7% on the week, First Uranium gained 4.0%, Paladin lost 5.5%, Uranium One lost 1.4% and USEC lost 35.8%. The best winner of the week was East Asia Minerals with a gain of 48.9% while the loser of the week was – surprise -- USEC with that 35.8% loss.
We still have slightly different long term indicators using the Weekly versus the Daily Indices. Both are above their positive sloping long term moving average line. It’s when we get into the momentum that we continue to have a difference in the indicators. The Weekly Index momentum indicator had been positive but is sitting right on top of its neutral line. The Daily Index long term momentum indicator has remained in its negative zone since late 2007. Since nothing drastic has changed I will still call the rating as BULLISH.
On the intermediate term the Daily Index remains below its negative sloping moving average line. The intermediate term momentum indicator is back just slightly inside its positive zone but below its negative trigger line. The volume indicator continues to track a basic lateral path and lately dropped below its negative trigger line. All in all I still must give the intermediate term a BEARISH rating.
On the short term the Index dropped below its short term moving average line earlier in the week and remains there. The line itself is now sloping downward. The momentum indicator remains in its negative zone and is just a hair below its negative sloping trigger line. As for the daily volume action, it is not very encouraging. The past couple of days with the Index closing higher the daily volume was pretty low. It seems that speculators are still not too encouraged to get back into the stocks, at least not in general. Individually there are a few stocks doing just fine, East Asia being one. Anyway, on the short term I can only give a rating of BEARISH.
On the immediate direction of least resistance, I will go with the lateral again. The Index is starting to move higher but without any great enthusiasm. The Stochastic Oscillator is perking up but also without any great enthusiasm. It remains in its negative zone.
It’s still not yet the time for general speculating but there are a few stocks that are doing great, and have been for a while. Some time ago I mention the use of the 15 DMAw cross above the 65 DMAw. The several stocks that are doing great right now had this technique work perfectly. It does often give you a whip-saw but overall this simple technique could get you in early in a stock advance and get you out early in a stock decline. It’s those whip-saw times that are frustrating. Try this on East Asia, Uranerz and Uranium Energy. Note the moving averages used are the weighted method. Where you do not have the weighted average capability then use the simple 10 DMA and simple 50 DMA instead.