for week ending 29 January 2010
Merv’s Daily Uranium Index
Market Data for Friday 29 Jan 2010
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.
This is about the longest stretch of consecutive down days that I can recall, without a lot of research. It’s now 8 straight days of a downside market as measured by my Daily Uranium Index. The odds are that if I should proclaim NOW that tomorrow the Index will be on the up side I should be right without even looking any further at the indicators or anything else. But, of course, I’m better than that. I will very carefully check out all the appropriate indicators, look at previous historically similar situations, get out my volumes of technical books, stick my finger out the window to see which way the wind is blowing and proclaim “tomorrow the Index will be on the up side”. You heard it first here.
The plunge in late Oct was more severe in a slightly shorter space of time. That plunge resulted in a very gradual up trend and lateral drift leading up to the present plunge. These swift plunges followed by long excruciating lateral moves have got to stop. BUT we need to get out of the box before that will happen. The Weekly Index has gotten out of its box but this Index is represented by the lower quality stocks and not really what moves markets. The larger stocks, such as those that push the Daily Index, are the ones that finally decide which way the uranium market will move.
The Merv’s Daily Uranium Index closed lower on Friday by 1.22 points or 0.72%. There were 24 winners, 20 losers and 6 stocks totally confused. The five largest stocks were mixed although primarily negative. Cameco lost 3.5%, First Uranium lost 1.5%, Paladin lost 0.6%, Uranium One was confused and Uranium Participation gained 1.0%. The best winner of the day was Purepoint Uranium with a gain of 12.0% while the loser of the day was Mega Uranium with a loss of 7.4%. Market Vectors Nuclear Energy ETF lost 0.8%.
As for the full week, the Merv’s Weekly Uranium Index closed lower by 297.93 points or 5.04%. There were 9 weekly winners, 38 weekly losers and 3 confused after a full week of trading. Cameco lost 4.0% on the week, First Uranium lost 0.5%, Paladin lost 7.0%, Uranium One lost 2.4% and Uranium Participation lost 3.0%. The best winner was USEC with a weekly gain of 8.4% while the worst loser was Laramide with a weekly loss of 19.4%. Market Vectors Nuclear Energy ETF lost 3.6%.
For the long term perspective the two Indices, the Weekly and the Daily, are giving us totally different stories. The Weekly Index remains above its positive sloping moving average line. Its momentum indicator remains in its positive zone. We can draw an up trending trend line from the July low and the Index is still above the trend, although barely so. The Weekly Index, representing the actions of the lower prices stocks, remains BULLISH.
The long term chart of the Daily Index is another story. The Index is now below its long term moving average line and the line has just turned downward. The momentum indicator remains back in its negative zone. The previous up trending trend line, similar to the Weekly Index, has been decisively broken on the down side. The volume indicator has decisively turned lower and is below its negatively sloping trigger line. All in all, the long term rating using the Daily Index is BEARISH.
Other than the fact that the Daily Index is still trapped in the box it has been in for 9 months now there is nothing much positive to grab on to as far as the intermediate term is concerned. The Index remains below its negative sloping moving average line. The momentum indicator is deep in its negative zone and below its negative trigger line. The volume indicator is negative being below its negative sloping trigger line. All in all the intermediate term can only be rated as BEARISH.
On the short term we might be able to find a thing or two to grab on to. The Index remains below its negatively sloping moving average line. The momentum indicator is deep inside its oversold zone below a negative trigger line. It is so deep in the oversold zone that one just might say that a bounce in the Index is eminent. The daily volume action is quite low, as one would expect during a down trend. The masses are reluctant to sell but are quick to buy on the up side. The short term remains BEARISH but a rebound of some sort could be just around the corner.
For the immediate direction of least resistance that should be the down side looking at the indicators but the Stochastic Oscillator has been perking up and moving higher as the Index closes lower. Another sign that a turn around should be about to start. I knew I could find some justification for going to the up side as the direction of least resistance. The eight days of steady decline had nothing to do with the decision.