Merv's Daily Commentary 15 Sept 2009

After The Close, 15 Sep 2009

Merv’s Daily Uranium Index
Market Data

Open: 171.53
High: 175.79
Low: 167.56
Close: 172.45
Volume: 3926

Note that the volume is an average volume of round lot sales for the 5 0 component stocks. For total volume, multiply by 5000.

So, if you did the opposite to my immediate direction guess you would have been on the right side of today’s market. The Daily Index is once more heading towards the serious resistance at 180 but is not quite there yet. At the rate it is moving I would give it another two or three days to decisively breach the resistance. That is, of course, assuming the Index continues on its upward path. The uranium price is still not helping as it was down another $0.50 this week. Comments on the action of the uranium price at the end of this commentary.

The Merv’s Daily Uranium Index closed up 3.53 points or 2.05%. There were 31 winners, 12 losers and 7 going nowhere. Most of the five largest stocks were winners. Cameco gained 2.6%, First Uranium gained 3.2%, Paladin gained 0.5%, Uranium One gained 3.9% and Uranium Participation was the only loser with a loss of 0.9%. The best winner of the day was Bannerman with a gain of 16.4% while the loser of the day was Alberta Star with a loss of 14.3%.

As one can expect everything is still positive on the intermediate term. The Daily Index remains above its positive sloping moving average line and the momentum indicator remains in its positive zone above a positive trigger line. The volume indicator is moving higher and is above its positive trigger line. I guess that makes the intermediate term rating BULLISH. For those who may be watching for the short term moving average line to cross above the intermediate term line, that has not happened yet but is very, very close to happening.

On the short term we have an Index above its positive moving average line. We have the momentum indicator in its positive zone above its positive trigger line. Only the daily volume action is not to my liking. Anyway, the short term rating remains BULLISH. The very short term moving average had crossed above the short term line a few days back and remains above the short term line for confirmation of the bullish rating.

Shall we try that immediate direction of least resistance? The Stochastic Oscillator continues to move lower below its negative sloping trigger line for an indication that the daily action is not as strong as the Index move may indicate. Although the Index continues to move higher the fact that the SO is moving in the opposite direction worries me. This might change in the next day but for now it has negative implications for the immediate future. I will therefore cop-out and go back to my normal lateral direction for the immediate future.

There was an interesting question from a commenter a few days ago whether we had a head and shoulder pattern in the uranium price trend. I looked through the short and long term chart and we do have the possibility of a short term head and shoulder (bearish) and the possibility of a long term reverse head and shoulder (bullish). The short term H&S has a very steep sloping right shoulder but it does look like the sloping neckline has been crossed with a down side projection to about the $42 level. The bullish reverse H&S also has a sloping right shoulder but not as pronounced as the short term slope. Providing the down trend does not go much below that $42 projection then we could continue to have a potential reverse H&S requiring a move to about the $53 level for a break above its neckline. That might then project a move to about the $67 level. Not much of a projection but it would get things going.