for week ending 06 November 2009
Merv’s Daily Uranium Index
Market Data for Friday 06 Nov 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.
Some days up, some days down but overall the Daily Index went nowhere this past week. Yes it was up a little on the week but when you take into consideration the daily range it was basically a sideways week.
Looking at the longer term daily chart (posted earlier) we see that the Daily Index has been in a lateral holding pattern for some time now. The attempt a couple of weeks back to break through the upper resistance failed and we continue inside the “box”. Not only has the price been in a lateral path since late April but so have the long term momentum and the volume indicators. Boy, once it makes its break we (hopefully) will see some real action. A move to the 200 level would give us some interesting upside projections from the P&F chart. We still have an existing 300 projection but it could be increased to as much as the 540 level after the break, with a rest period around the 400 mark. But first we must make that break-out. A $3.00 drop in the price of uranium this past week was no help.
A common criteria in technical analysis is that once a support level is broken it then reverts to a resistance level and once a resistance is broken it becomes a support. This can be vividly seen in the longer term daily chart posted earlier. We had a resistance developed just above the 150 level in Jan and April. Once broken on the up side it became a support ever since. I would expect the same thing to happen once the Index breaks above the existing resistance just below the 200 level.
The Merv’s Daily Uranium Index closed down on Friday for a daily loss of 0.98 points or o.56%. There were 15 daily winners, 24 daily losers and 11 totally confused and not knowing which way to go. The five largest stocks were` also quite confused with one up, two down and two going nowhere. Cameco gained 0.6%, First Uranium went nowhere, Paladin lost 1.2%, Uranium One lost 4.0% and Uranium Participation was the other going nowhere stock. The best daily performer was Purepoint with a daily gain of 11.8% while the loser of the day was Terra Ventures with a loss of 16.7%. The Market Vectors Nuclear Energy ETF lost 1.3% on the day.
For the week the Merv’s Weekly Uranium Index closed higher by 128.91 points or 2.46%. There were 32 weekly winners, 14 weekly losers and 4 going nowhere. We still have a long way to go to get to a comfortable market position as the Weekly Table (posted earlier) shows only 28% of the stocks in bullish trends and 54% still in bearish trends, on the intermediate term. The short and long terms are not much better. The five largest stocks were all in the winner’s circle. Cameco gained 3.8% during the week, First Uranium gained 1.9%, Paladin gained 3.1%, Uranium one gained 1.0% and Uranium Participation gained 7.4%. Market Vectors Nuclear Energy ETF gained 2.3% on the week.
Looking to see where we stand for the long term, nothing much has changed from where we have been for some time. Both Daily and Weekly Indices are above their long term moving average lines with the lines pointing upward. The long term momentum indicators are in different locations on their charts. The Daily indicator is in its negative zone below its negative sloping trigger line while the Weekly indicator is in its positive zone oscillating above and below its trigger line. The volume indicator remains above its long term positive sloping trigger line. All in all I would continue with a BULLISH rating for the long term.
The intermediate term gave us a scare recently but is once more trying for a positive mood, not exuberant but working towards a positive. The Daily Index remains below its moving average line but the line is oh so slightly sloping upwards. The momentum indicator is in its positive zone and sitting right on top of its negative sloping trigger line. The volume indicator remains above its positive trigger line for now. Too many variables to call it anything other than NEUTRAL at this point.
The short term is not as mixed. The Index remains below its negative sloping moving average line while the momentum remains in its negative zone but above its positive trigger line. The daily volume action is not the action of a bullish trend with the Friday volume still slightly below its 15 day average volume. On the short term the rating remains BEARISH.
As for the immediate direction, the Index remains above its very short term moving average line but is moving lower and could cross the line in another day. The aggressive Stochastic Oscillator is in its positive zone above its positive trigger but with indications that it might be topping out. I will go with the lateral direction as the most likely for the next day or two.