for week ending 05 November 2010
Merv’s Daily Uranium Index
Market Data for Friday 05 Nov 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.
It’s been a very good week, in fact a very good four months, but sooner or later the trend must take a rest to refurbish itself and get more strength for the next thrust. The P&F chart that I show from time to time (and will show it early during the week again) has made an upside break. I can calculate three projections from the chart. The first is from the initial upside break almost 2 years ago. That initial projection was to the 300 level and remains valid. With this new move I can calculate a further projection to 400 and then on to 620. So, if we trust the P&F chart the good times are back again. As a technician I use the projections only as a guide and let the daily and weekly market action tell me what is happening and go with the flow.
This is about the first time in some time where the weekly performances of the Daily and Weekly Indices were almost the same. For weeks now the Weekly Index has been out performing the Daily Index, i.e. the speculative stocks were moving far better than the quality ones were. This week they all seem to be performing about the same. That is not to say that there were not some great movers during the week, just look at the Table previously posted. Just an interesting observation but there was only one double digit loser during the week and 16 double digit winners. That’s what I like to see.
The Merv’s Daily Uranium Index closed higher on Friday by 2.17 points or 1.05%. There were 24 daily winners, 19 losers and 7 stocks bumming around. Cameco gained 0.9%, Extract gained 0.4%, Fronteer lost 0.7%, Paladin gained 3.1% and Uranium One gained 7.3%. The best daily winner was Forum Uranium with a gain of 20.0% while the loser of the day was Ur Energy with a loss of 4.9%. Market Vectors Nuclear Energy ETF gained 0.6%.
For the week as a whole the Merv’s Weekly Uranium Index closed higher by 493.18 points or 7.06% (the Daily Index had a 6.99% weekly gain). There were 34 weekly winners, 12 weekly losers and 4 stocks just bumming around. Cameco gained 5.1%, Extract gained 4.9%, Fronteer gained 5.9%, Paladin gained 12.8% and Uranium One gained 19.9%. The best weekly winner was Uranerz Energy with a weekly gain of 43.3% while the loser of the week was Crosshair Exploration with a loss of 10.9%, the only double digit loser of the week. Market Vectors Nuclear Energy ETF gained 6.2%.
It goes without saying that everything on the long term is positive for both Indices. During times like that it is instructive to start watching out for signs of weakness that may halt the upward drive of both Indices. Well, so far there is no real indication of weakness in the long term indicators. About the only indication of possible approaching weakness is the Weekly Index momentum indicator. It is almost at its overbought zone from which one might expect the trend to halt. What could happen after is either a lateral drift or a reaction of short to intermediate term length. However, we are not there yet so both the Daily and Weekly Indices are BULLISH as far as the long term is concerned.
The same can be said about the intermediate term. The Daily Index is well above its positive sloping moving average line. The momentum indicator remains in its positive zone above its positive trigger line. The volume indicator is in new all time high territory and above its positive trigger line. About the only slight negative is the momentum indicator. It is just a hair below its overbought line and could enter the overbought zone any day now. Once there the risk of a reversal or serious lateral drift increases. For now all is well with the world and the intermediate term rating remains BULLISH. The short term moving average line is way above the intermediate term line for solid confirmation of the bull.
As for the short term here too all is well with the world. The Daily Index remains comfortably above its short term positive sloping moving average line. The momentum indicator remains very positive and above its positive trigger line. However, the short term momentum is already in its overbought zone and has been there for some time. It’s getting nearer and nearer to some kind of short term reversal to hit us. Be prepared but no need to panic (yet) should it happen. The daily volume action has been quite positive and no complaints today. On the short term the rating remains BULLISH. The very short term moving average line confirms the bull.
Trying to guess what’s going to happen tomorrow or the next day I’ll have to get out my two headed coin. Trend wise everything is okay but the Stochastic Oscillator is a little less positive. It is suggesting that the move into new recovery high territory is on strength that is slightly weaker than before. Nothing yet serious as the strength is still positive but diminishing. It can’t diminish forever so a reversal is ahead somewhere. I don’t think that it will be tomorrow but who knows? I’ll go with my lazy lateral direction for tomorrow.
Although the stocks are going gang-busters on the up side we have been in a bull trend for some time now and further purchases of stock may be at a high point. At this time it just may be better to wait for a rest period to come into play before jumping in further. The opportunities will still be there even if you are wrong but jumping in and finding out the top has just arrived is more painful.
I haven’t had time to post some individual stock analysis but will try this week. It might be later in the week but I’ll see how the time goes.