Uranium Companies

There are very few pure uranium companies. Most companies, especially the small exploration type, are active in more than the uranium industry. This blog makes no attempt to guage the percentage of a companies activity that are related to the finding, mining or processing of uraniun. They all do, however, have some uranium activities (to the best of our review).

Merv's Uranium Indices

I have developed two Uranium Indices. They each have the same component stocks but are calculated using different methodologies. My weekly Index is based upon the average weekly performance of the component stocks. My daily Index is based upon the daily average of the component stocks open, high, low and close prices along with the daily average volume of all component stocks.

Click on the chart or table to enlage the view.

28 November 2010

Merv's Weekly Commentary 28 Nov 2010

Merv’s Weekly Uranium Review
for week ending 26 November 2010

Merv’s Daily Uranium Index
Market Data for Friday 26 Nov 2010

Open: 232.70
High: 241.34
Low: 229.67
Close: 238.05
Volume: 12414

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.

WOW! That was one heck of a week. The Daily Index ended the week with a weekly advance of 8.52% while the more aggressive stocks (Weekly Index) ended the week with an average gain of 16.16%. As I have been saying for some time now, the action is really with the speculative stocks. Why bother with the biggies? Looking through the Table this week (posted earlier) there were 30 stocks (60%) that were double digit weekly winners, 20% of those were winners by more than 30%. Cameco by comparison was up only 4.2% despite some very good news about it this past week. Again, tell me why one would RISK capital in these biggies?

For those more interested in the ETF field, the more general nuclear ETF, Market Vectors Nuclear Energy ETF, gained 3.5% during the week while the uranium stock ETF, the Global X Uranium ETF, gained 8.74%. The stock fund here seems to be doing better than the overall nuclear fund but it’s still early in the historical experience of the Global X. Note that the Global X performance is almost exactly that of the Daily Index.

The speculative stocks have had such a good run for so many weeks now (see the Weekly Index posted earlier) that they are getting very close to some kind of reaction. It will be to lower prices but how low? And WHEN? We can just hope for the best and wait for the reaction to come. It could be tomorrow or it might not be for weeks yet. As I often mention, the market does what it has to do to frustrate the most people most of the time. So, where are we and what is going on?

The Merv’s Daily Uranium Index closed on Friday with a gain of 2.68 points or 1.14%. There were 30 winners, 14 losers and 6 not playing the game. Cameco lost 1.7%, Denison gained 3.1%, Extract lost 0.1%, Paladin lost 2.2% and Uranium One lost 0.7%. So many losers in the top 5, the winners must be those speculative stocks, eh! The best winner of the day was Forum Uranium with a gain of 21.3% while the loser of the day was Mawson with a loss of 8.6%. Market Vectors Nuclear Energy ETF gained 1.3%.

For the week as a whole the Merv’s Weekly Uranium Index closed the week up 1299.35 points or 16.16% (as mentioned, the Daily Index closed with a weekly gain of 8.52%). There were 49 weekly winners, 1 loser and everyone was in the game. Cameco gained 4.2%, Denison gained 26.4%, Extract gained 3.5%, Paladin gained 4.2% and Uranium One gained 13.2%. The best weekly winner was Forum Uranium with a gain of 62.9% while the worst loser (there was only one) was NWT Uranium with a loss of 2.4%. Market Vectors Nuclear Energy ETF gained 3.5%.

The charts and indicators are all pretty rosy after a week like this last one. On the long term both the Weekly and the Daily Indices are above their respective positive moving average lines. Their momentum indicators are in the positive zone above positive trigger lines. With its super performance the weekly momentum indicator has now entered its overbought zone and one can expect a rest or reaction pretty soon. Both of the long term momentum indicators are at new highs confirming the Index move although the Daily has not yet come close to reaching its overbought zone. As for the Daily volume indicator, it is zooming in new all time high territory above its positive trigger line. What can one say, the rating for the long term remains BULLISH for both Indices with some caution due to the weak momentum entering the overbought zone.

On the intermediate term things are also still quite positive although here the momentum indicator is giving us a more emphatic warning. The Daily Index is still well above its positive moving average line. The momentum indicator remains in its positive zone and once more is above a positive trigger line. However, the momentum indicator has entered its overbought zone while at the same time giving us a potential negative divergence warning. The volume indicator remains positive above its positive trigger line. Despite the warning, which one should never forget, the rating remains BULLISH with the short term moving average line confirming the bull by remaining above the intermediate term line.

One might start to see hesitation in the Daily Index as far as daily action is concerned. The Index started On Friday on the down side but in the end closed at new recovery highs. The hesitation seems to be there but it looks like the speculators are not quite ready to call it quits and start their sell activities. The Daily Index closed above its positive sloping short term moving average line. The momentum indicator remains in its positive zone but giving us a potential negative divergence versus the price action. I call it a potential negative divergence as the indicator is still moving higher along with the Index. Until a reversal of daily action presents itself confirming the indicator is in negative divergence then it is just possible for the indicator to eventually get into new highs confirming the Index move. As for the daily volume action, although the recent volume is high relative to the volume over the past several months it is lower than the past average volume for 15 days. However, the rating for the short term remains BULLISH with the very short term moving average line confirming this bull.

As for the immediate direction of least resistance, that’s up in the air. The Index is still moving upward. The Stochastic Oscillator, however, is in its overbought zone and the topping process can be clearly seen. It has now dropped below its trigger line but not yet below its overbought line. That might come with a day of negative Index action. I will go with my cop-out direction, the lateral direction, for tomorrow and see what transpires.

What to do?

I always suggest one should look at the individual stock action. If the market trend is positive then one is at a lower risk of reversals. If the market trend is negative one is accepting a greater risk of reversal buying stock even if the stock is positive. One must also decide if one’s trading horizon is short, intermediate or long term. Remember, the longer the speculative horizon period the greater the stock drops before a sell signal is given. The shorter the time period the more likely the signals get reversed. You picks your criteria and you takes your chances.
I like the happy medium, the intermediate term time period. As such one could do just fine by using the 15 DMAw cross over with the 65 DMAw moving average. If one is not familiar with the weighted (NOT exponential) moving average method then one can use the simple 10 DMA and 50 DMA for results just as good. It’s your game, if you use it you own it.


Anonymous said...

Hi Merv,

There are a few more uranium/nuclear related ETF's for those interested in following. (They are not a pure play miner index)

NUCL - iShares S&P Global Nuclear Index
PKN - Powershares Global Nuclear Energy

Anonymous said...

Hi Merv,
I think that we have all been waiting for this particular run in the U stocks. I like your suggestion for the intermediate term focus. I don't think that I'll be selling any positions until I hear my cab driver or my news sources telling me that I should be investing in the uranium plays. Keep up the great work!

Merv said...

Thanks for the new Nuclear ETFs. They are now in my directory.