Merv's Daily Commentary 09 Feb 2011

After The Close, 09 Feb 2011

Merv’s Daily Uranium Index
Market Data

Open: 281.92
High: 285.50
Low: 275.91
Close: 281.27
Volume: 8440


Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000.

Boy, this trying to review and update an Index of stocks is not easy. First, one has to have some sort of a criteria for the stocks to be included in the Index. That I have, although it is sort of fluid at times. My first criteria is to include the top 25 stocks traded on the North American markets based upon market value but gee-wizz, one then comes across this problem that many of these stocks have other businesses dealing in other minerals and metals so what % of their market value should one address based upon some unknown knowledge of what % of their business is really uranium. Flip of the coin comes in pretty handy at this point. Once these 25 have been picked then how to choose the other 25 is the next problem. Here comes my second criteria, flip the coin furiously. For no other reason than it sounds right I added the several stocks with market values over $100 Million that were not already in the top 25. So that left us with about 15 to 18 positions to fill.

My directory of uranium stocks is constantly changing but at present stands at over 150 stocks. Most are in the penny range, more than 40% are under $0.25. From these it was a problem to know which to choose. A review of the existing Index stocks suggested that maybe only one was not performing and was open for replacement. Therefore NWT was replaced by Vena. That’s it for today. The list will be continually reviewed and I will keep in mind stocks suggested by readers to the blog so additional changes could occur almost anytime. Suggestions for stocks to watch and possibly use in the Index are always welcome. I’m sure there are uranium based stocks out there that I do not have in my directory.

Sure looks like the Daily Index is in a topping mode, doesn’t it? Nothing much has actually changed from yesterday so I’m sure most of you were able to assess the Index position correctly and the same here. For the one or two who may have had a problem let’s go through the exercise.

The Merv’s Daily Uranium Index closed lower by 0.93 points or 0.33%. There were 15 winners, 33 losers and 2 bummers. Cameco gained 2.9%, Denison gained 0.3%, Extract lost 1.1%, Paladin gained 1.1% and Uranium One lost 2.6%. The best daily winner was Continental Precious with a gain of 5.2% while the daily loser was Energy Fuels with a loss of 13.3%. Market Vectors Uranium-Nuclear Energy ETF lost 0.4% while Global X Uranium ETF lost 0.6%.

On the intermediate term the Daily Index remains well above its positive sloping moving average line. The momentum indicator is still in its positive zone and above its positive trigger line but is in a turning mode so may drop below its trigger any day now. The volume indicator remains in new high territory above its positive trigger line. Everything here shouts that the rating remains BULLISH. The short term moving average line remains above the intermediate term line confirming this bull.

On the short term, The Index here is also above its positive sloping moving average line and in a well noted topping process. The momentum indicator remains well inside its positive zone but also in a topping process. It has dropped below its trigger line today but the trigger is still in an upward slope. During a topping process it is not unusual for the daily volume action to be less than during the run-up, so we have it. The short term rating remains BULLISH but in danger of possibly reversing pretty soon. The very short term moving average line remains above the short term line for confirmation of the bull.

As for the immediate direction of least resistance, that should be heading towards the down side but I’ll go with another day of basically a lateral move. The Stochastic Oscillator continues its move to the down side as was seen yesterday.