Merv's Daily Commentary 28 Mar 2011

After The Close, 28 Mar 2011 Merv’s Daily Uranium Index Market Data Open: 206.89 High: 208.31 Low: 198.39 Close: 200.94 Volume: 12157 Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000. The bears are still in firm control of the uranium stocks and the more speculative ones are getting hit the most (as one would expect). Some readers may have noticed the large gap in the trading between Friday the 11th and Monday the 14th. Most amateur technicians expect this gap to be filled. Well, there are some books that talk about filling gaps BUT one should first define the gap. There is a normal trading gap, a break-away gap and an exhaustion gap. The normal and exhaustion gaps are very often filled by subsequent trading activity, say over the subsequent several weeks. This filling of the gap is only a rebound from the gap direction and NOT a reversal of trend. After the gap is filled the trend shown by the gap then continues. I would not, however, place any confidence in this gap filling criteria to the point of risking capital. However, there is a break-away gap that occurs early in a new trend. These break-away gaps are very seldom filled within any early period of time. Break-away gaps on the up side indicate the start of a new bull market and the trend continues in the bull direction without any reversal and closing of the gap. Break-away gaps on the down side are the start or early part of a new bear market and may get filled but usually in some length of time, after the bear is over and a new bull move gets going, and only if the new bull move goes as far as this gap which might have, by that time, been very, very long ago. I am afraid we just might have a bearish break-away gap here that will not get filled for some time. But, we will just have to wait and see. The Merv’s Daily Uranium Index closed lower by 7.79 points or 3.73% (the average price of a component stock declined 4.9% indicating the greater hit by the lower priced stocks). There were only 3 daily winners, 41 losers and 6 stocks wondering around lost. Cameco lost 4.2%, Denison lost 6.0%, Extract lost 3.3%, Paladin lost 2.9% and Uranium One lost 10.3%. The best winner of those three winners was Benton with a gain of 6.4% while the loser of the bunch was Strathmore with a loss of 11.5%. Market Vectors Uranium + Nuclear Energy ETF lost 2.3% while Global X Uranium ETF lost 5.2%. What can I say? Everything continues to be negative and the ratings continue to be BEARISH for all three time periods. The immediate direction of least resistance seems to be to the down side.