for week ending 19 March 2010
Merv’s Daily Uranium Index
Market Data for Friday 19 Mar 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 last two days have not been the best but Friday’s action seems to suggest that the Daily Index is really not all that fussy to go into any serious down trend. The basic lateral trend continues with the Index inside that year long box as well as inside a 5 week box (I know, I keep moving the upper and lower barriers but that’s what we technicians do). Other than the box there is no overriding pattern here so I’ll just go directly to the time period analysis.
The Merv’s Daily Uranium Index closed on Friday down 1.71 points or 0.99%. There were 14 winners, 27 losers and 9 stocks not in the game. The five largest stocks were mixed with Cameco losing 1.5%, First Uranium gaining 3.3%, Paladin gaining 0.8%, Uranium One gaining 0.8% and Uranium Participation losing 3.0%. The best winner of the day was Uracan with a gain of 5.6% while the loser of the day was UEX Corp with a loss of 10.3%. Market Vectors Nuclear Energy ETF lost 0.9%.
For the full week the Merv’s Weekly Uranium Index closed lower by 215.03 points or 3.83%. There were 11 weekly winners, 34 losers and 5 not in the game. The five largest stocks were mixed for the week. Cameco lost 2.8%, First Uranium lost 5.4%, Paladin gained 6.0%, Uranium One lost 5.0% and Uranium Participation gained 0.3%. The best weekly winner was Denison Mines with a gain of 19.1% while the worst weekly loser was UEX Corp with a loss of 22.8%. Market Vectors Nuclear Energy ETF lost 0.1% on the week.
Little by little the two Indices are coming together in their long term technical pictures, unfortunately it’s on the down side. The Merv’s Weekly Index has now dropped below its long term moving average line although the line is still slightly on the up side. The long term momentum indicator is still in its positive zone but only by a hair. The slightest extra negative move by the Weekly Index and the momentum will go negative. The Weekly Index long term rating has now moved to the – NEUTRAL level, just one level above a full bear.
The Daily Index remains as it was last week. It is below its negative long term moving average line and the momentum indicator remains in its negative zone and it has just crossed its trigger line to the down side. The trigger has also turned downward. The volume indicator is still in a basic lateral trend but has dropped below its negative trigger line. The Daily Index long term rating remains BEARISH.
On the intermediate term The Daily Index is below its negative sloping moving average line. The momentum indicator is in its negative zone and now below its negative trigger line. The volume indicator remains below its negative trigger line. Nothing here encouraging. The intermediate term rating is BEARISH. The short term moving average line continues below the intermediate term line for confirmation of the bear.
We await changes in the short term indicators to warn of a change in market direction but it has not yet occurred. The Daily Index is below its negative sloping moving average line. The momentum indicator has dropped into its negative zone and is below its negative trigger line. Most disconcerting is the momentum has now dropped below its late Feb low, very slightly below but still below. The daily volume activity is not giving us any encouragement either. It seems to exceed its short term average volume on up days as well as down days, Friday as an example. The short term can only be rated as BEARISH. The very short term moving average line has not quite dropped below the short term line and therefore is just shy of confirming the bear.
As for the immediate direction of least resistance, there are plenty of reasons to stick with the down side but Friday’s action suggests that the Index doesn’t really want to move too much lower so I’ll go back to my lateral direction guess. I think the Index will remain in the short term box for at least a few more days.
Regardless of how much we might want to read positive things into the market action or how much we wish for the market to get better, in the end one must go with what the charts and indicators are say is the situation at any point in time, for the particular time period one is interested in. I have long ago learned not to trust in guesses or feel but trust the indicators. You are always taking on extra risk and potential loss of capital by going against the message of the indicators. In a previous life I got my subscribers out of Bre-X at $23.00 (buy in was at $0.31) and out of Nortel at $100.00 (that’s pre-split Nortel, or at $1000.00 in today’s stock). In both cases subscribers were pretty annoyed that I had issued sell recommendations because everyone was telling them how good each stock was. Go with the technical indicators and forget those around you, including the experts.