for week ending 10 September 2010
Merv’s Daily Uranium Index
Market Data for Friday 10 Sep 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 Daily Index keeps edging higher little by little, very little by little. There is a saying that a bull market climbs a wall of worry, but does it have to climb so slowly? The past few days are looking more and more like a short term topping process. The aggressive Stochastic Oscillator had moved into its overbought zone but dropped back below its overbought line on Wednesday. It has continued to move lower as the Index moved higher. There is a disconnect between the SO and the Index that will be resolved. This resolution is usually towards the message of the indicator, that means downwards here. We’ll just have to wait and see but I would not be making any major purchases right now unless the individual stock has something going for it that the general group does not. When a down turn takes hold it takes the good with the bad unless it is a very minor down turn, which just could be the case here as I am looking at very short term indicators.
The Merv’s Daily Uranium Index closed on Friday on the up side by 0.55 points or 0.33%. There were 27 winners, 14 losers and 9 stocks not in the game. Cameco gained 2.0%, Extract lost 5.3%, Fronteer gained 0.6%, Paladin lost 0.6% and Uranium One lost 1.2%. The best daily winner was Strathmore with a gain of 13.6% while the worst daily loser was Formation Metals with a loss of 14.4%. Market Vectors Nuclear Energy ETF gained 0.3%.
For the week the Merv’s Weekly Uranium Index closed up 154.32 points or 3.20%, double that of the weekly performance of the Daily Index. There were 26 weekly winners, 17 weekly losers and 7 not in the game. Cameco gained 0.4% on the week, Extract lost 1.7%, Fronteer gained 0.4%, Paladin lost 1.6% and Uranium One lost 1.4%. The best weekly winner was Strathmore with a weekly gain of 28.8% while the loser of the week was Uracan with a small weekly loss of 7.1%. Market Vectors Nuclear Energy ETF gained 0.6% on the week.
Things are starting to look up in the long term indicators but not quite yet enough to make a major change in the ratings. Both the Daily and Weekly Indices continue to move above their long term moving average lines but the line slopes have not yet turned to the up side. The slope for the Weekly moving average is still slightly negative while the slope for the Daily Index has been moving sideways for the past few days, neither upwards nor downwards. The momentum indicator for the Weekly Index has just moved slightly into its positive zone while the momentum indicator for the Daily Index closed on Friday just a hair short of crossing into its positive zone. Both indicators are above their respective positive trigger lines. Although the daily volume activity remains low it is almost all on the up side. This gives the volume indicator a positive reading and it is well above its positive trigger line. All in all the Daily Index long term rating remains BEARISH while the Weekly Index rating has improved to the + NEUTRAL level.
On the intermediate term everything continues to be positive. The Daily Index remains above its positive moving average line. The momentum indicator remains in its positive zone above its positive trigger line. The volume indicator is moving in a positive direction above its positive trigger line. The intermediate term rating remains BULLISH confirmed by the short term moving average line remaining above the intermediate term line.
On the short term things are still quite positive but with signs of a possible topping process on-going. For the past few days the daily Index price action just doesn’t seem to be going anywhere despite closing on the up side each day. The Index made a daily high on Wednesday that has not been breached on the following days, again, despite daily closing prices continuing higher each day. This is not the actions of a positive Index. I would be expecting the Daily Index to move lower for a while, how long is not known yet. In the mean time the Index remains above its positive sloping moving average line and the momentum indicator remains in its positive zone above its positive trigger line. Only the daily volume activity is a bummer and may be foretelling the possible upcoming decline. For now the rating, as of Friday, remains BULLISH.
As for the immediate direction of least resistance, I have already mentioned all the things that make the Index look weak so I’ll just go with the down side for the next day or so.