for week ending 05 February 2010
Merv’s Daily Uranium Index
Market Data for Friday 05 Feb 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.
The week started on an encouraging note but then uranium stocks collapsed. However, it just might be that Friday actually was a good day (it did close higher) as it looks like a trend reversal at the later part of the day. More comments below in the “immediate direction” comments.
We are getting very close to that lower support from the several month long box. The Index is not far above and the long term momentum indicator for the Daily Index is showing the indicator to be getting close to its support level of the past several months. Either we are in fact going to get a bounce, or hopefully a reversal, or we are heading for much lower prices. My betting is on a bounce to start.
The Merv’s Daily Uranium Index closed higher by 1.00 points or 0.61% on Friday. There were 22 winners, 20 losers and 8 just marking time. All of the five largest stocks were on the up side. Cameco gained 1.1%, First Uranium gained 6.7%, Paladin gained 2.4%, Uranium One gained 1.9% and Uranium Participation gained 0.3%. The best winner of the day was Mawson with a gain of 8.1% while the loser of the day was Forum Uranium with a loss of 6.7%. Market Vectors Nuclear Energy ETF closed lower by 0.4%.
For the week as a whole, the Merv’s Weekly Uranium Index closed lower by 215.23 points or 3.83%. There were 12 weekly winners, 38 weekly losers and everyone knew where they were going. Cameco lost 2.4% on the week, First Uranium lost 25.0%, Paladin lost 0.9%, Uranium One lost 1.5% and Uranium Participation lost 1.5%. The best winner of the week was Uranerz Energy with a gain of 11.5% while the loser of the week was First Uranium with that 25.0% loss. Market Vectors Nuclear Energy ETF lost 2.9%.
As we usually do we look at the long term trend from two angles. We view the indicators and chart for the Weekly Index which better represents what’s happening to the smaller stocks and we view the indicators and chart for the Daily Index which better represents what’s happening to the larger stocks.
The Weekly Index has now closed below its long term moving average line but the line is still pointing upward. The momentum indicator has been moving lower and is very, very close to moving below its neutral line but at Friday’s close it is still just above the line in the positive zone. The Weekly Index is just about to go bearish but at this time I would only down grade the rating to the – NEUTRAL level, one notch above a full bear rating.
The Daily Index has been trading below its moving average line for a couple of weeks now and the moving average has finally turned downward. The momentum indicator is back below its neutral line in the negative zone, where it has spent most of the past several months. The volume indicator is trending negatively and is below its negative sloping trigger line. The long term rating for the Daily Index can only be BEARISH.
For the intermediate term the Daily Index remains below its negatively sloping moving average line. The momentum indicator remains in its negative zone below its negative trigger line. The volume indicator is in a negative mode and below its negative trigger line. All this tells us that the intermediate term rating is BEARISH. As confirmation, the short term moving average line has moved below the intermediate term line.
On the short term we do have some encouraging signs, but no reversal of trend yet. The Daily Index is below its negative sloping moving average line. The momentum indicator is the encouraging indicator. Although it is in its negative zone and below its negative sloping trigger line it is heading to break above its oversold line for the second time in a couple of weeks. This time it is doing so without first making a lower low as the Index is doing. We have a short term positive divergence. I would emphasize that it is a short term positive sign and although it should result in a bounce in the Index such bounce may not have longevity. It would depend upon how the Index acts during such bounce. For now the short term is BEARISH, confirmed by the very short term moving average line (not shown) being below the short term line.
As for the immediate direction of least resistance, I’m going out on a limb here and going to the up side. The short term positive divergence is one reason. The aggressive Stochastic Oscillator, although moving lower, is resisting plunging in the process and stays above its previous low (a possible positive divergence). Finally, the Index action during Friday suggests that the Index was on the rise near the end of the day and this could continue into the next trading day. So, let’s go for the up side.