for week ending 19 February 2010
Merv’s Daily Uranium Index
Market Data for Friday 19 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.
First, apologies to all for forgetting to post the Indices and Table last week. I did develop them but for some reason forgot to post them. I guess in my old age, as they say, the mind is the first thing to go.
It’s been a pretty good week for a lot of uranium stocks. Still, we have a long way to go when you look at the Weekly Chart (actually posted this week). Let’s take it a step at a time. We’re not going to get to the previous top any time soon but we can hope that the direction will be towards closing the gap.
Technicians like to look at the charts and see all sorts of patterns and trends. I like for such patterns to jump out at me and not have to work to see anything. If you have to work at it then it probably is going to disappoint you. Looking at the long term charts (Daily & Weekly) about the only significant pattern or trend that jumps out at me is the lateral trend we have been in for almost a year. This is the box often mentioned in these commentaries. On the Daily chart that box has boundaries at the upper end at about the 197 level and at the lower end at the 151 level. The Daily Index has been boxed in between these boundaries since last April. That’s ten months now. The Weekly Index is also boxed in but it did try to move out of the box but ran into too much resistance and is once more inside the box. With this week’s advance it looks like the Weekly Index is ready to make another break-out. The Daily Index is still some distance from any break-out. Just as an aside, one can see on the Daily chart the principle that a resistance, once broken, very often becomes a support. This we see at about the 151 level.
One additional, probably minor, point on the long term Daily chart is the momentum indicator. Noted is the fact that on the three high points the long term momentum showed a little extra strength behind the move on each succeeding high. On the three low points the internal strength of the Index was either unchanged or slightly on the improvement side. I would like to see much greater strength shown on the up side and much greater strength (higher indicator value) on the down moves than what we have here but at least the information does not lead us into thinking negatively.
The Merv’s Daily Uranium Index closed on Friday ahead by 1.59 points or 0.92%. There were 24 winners, 17 losers and 9 stocks spinning their wheels. The five largest stocks were mixed at the close. Cameco gained 1.4%, First Uranium lost 3.2%, Paladin gained 3.1%, Uranium One gained 0.3% and Uranium Participation lost 0.3%. The best daily winner was Benton Resources with a gain of 14.0% while the loser on the day was Powerpoint Uranium with a loss of 7.3%. Market Vectors Nuclear Energy ETF gained 0.3%.
For the week as a whole the Merv’s Weekly Uranium Index gained 243.25 points or 4.49% (the Daily Index had a very similar weekly gain). There were 36 weekly winners, 10 weekly losers and 4 stocks spinning their wheels. For the week Cameco gained 4.4%, First Uranium lost 14.0%, Paladin gained 11.1%, Uranium One lost 3.1% and Uranium Participation gained 4.1%. The best winner on the week was Forum Uranium with a weekly gain of 31.3% while the worst weekly loser was First Uranium with that loss of 14.0%. For the week Market Vectors Nuclear Energy ETF gained 3.7%.
Once more the long term prognosis for the Daily and Weekly Indices differ so I’ll look at them individually. For any new readers, the Daily Index is more representative of the performance of the larger stocks while the Weekly Index is more representative of the performance of the smaller stocks.
Looking at the Daily Index and indicators first we have the Index still below its negative sloping long term moving average line. The momentum indicator remains inside its negative zone but is moving upwards and above its positive trigger line. The volume indicator is perking up and has crossed above its trigger line. The trigger, however, is still pointing downward. Putting it all together the Daily Index long term rating must still be classified as BEARISH.
The Weekly Index is giving us a different long term story. The Index is above its positive sloping moving average line. The momentum indicator continues to travel above its neutral line in the positive zone. I do not use trigger lines for the weekly data but if I did it would show that the momentum was probably still below a negative trigger. I also have no separate volume data for the Weekly Index. Still, putting it all together the Weekly Index rating would remain at its BULLISH level.
For the intermediate and short term I look primarily at the Daily Index. On the intermediate term the Daily Index is still below its negative sloping moving average line. The momentum indicator is still in its negative zone but moving upwards fast and is above its positive trigger line. As for the volume indicator, it crossed above its trigger line on Thursday and remains above today. The trigger line has also just very slightly turned to the up side. All in all, the intermediate term rating remains BEARISH. The short term moving average line remains below the intermediate term line for confirmation of the continuing bear.
As for the short term, here things are looking a lot brighter. Of course new trends are most likely to start in the short term chart before they show up in the other time periods. Here, the Daily Index crossed above its short term moving average line on Tuesday and remains there. The moving average line is also pointing in an upward direction. As for the momentum indicator, it has been moving upwards for almost two weeks now and had entered its positive zone on Wednesday where it remains. It is also above its positive sloping trigger line. As for the daily volume activity, that is still a weak point. The Friday (and Thursday) daily volume was below its 15 day average volume and needs to improve to show that the major speculators are bullish for the stocks going forward. Anyway, the indicators have the short term as BULLISH. The very short term moving average line is above the short term line which is an added confirmation of the bull.
Trying to guess what the immediate direction of least resistance should happen to be is always dangerous but that’s what you pay me the big bucks to do so here goes. Although the indicators are all very positive they could be too positive. There is a resistance level ahead at 177 which just may cause the immediate move to take a rest. The aggressive Stochastic Oscillator had moved into its overbought zone and on Friday just barely crossed back below its overbought line. This reversal very often foretells a possible halt to the up trending Index. It may not result in any great reversal but it does foretell that the internal strength of the very recent Index move may be weakening and could take that rest. For the next day or two, until better information, I will go with the lateral trend as the most likely.
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