for week ending 27 May 2011
Merv’s Daily Uranium Index
Market Data for Friday 27 May 2011
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 Indices were posted earlier and should be viewed during this commentary.
The short term Daily Index chart (shown here) is starting to look better and better. It almost looks like a rally going on. Short term wise it’s on the move but as yet it has not really affected the other time periods. That might come shortly with some more upside action.
The Merv’s Daily Uranium Index closed on Friday with a good upside move, up 4.76 points or 2.57%. The volume perked up relative e to recent volume but was not extra ordinary. It was good based upon the volume of other sectors, as the U.S. market players were taking an early long weekend and away from the action. There were 40 winners on Friday, 5 losers and 5 that weren’t sure if they wanted to be winners or losers. Cameco gained 1.7%, Denison gained 9.1%, Extract gained 2.4%, Paladin gained 1.2% and Uranium One gained 2.2%. The best winner of the day was Uracan with a gain of 20.0% while the loser of the day was Quaterra with a loss of 6.8%. Market Vectors Uranium + Nuclear Energy ETF gained 1.5% while the Global X Uranium ETF gained 3.4%.
For the full week the more aggressive (speculative) stocks took the lead. The Merv’s Weekly Uranium Index gained 10.1% for the week while the Daily Index gained only 6.0% for the full week. There were 41 weekly winners, 6 losers and 3 not knowing which way to go. This was the best weekly showing in some time. Cameco gained 7.4% on the week, Denison gained 15.7%, Extract gained 9.8%, Paladin gained 3.3% and Uranium One gained 3.0%. The best weekly winner was Uracan with a gain of 36.4% while the worst loser was Terra Ventures with a loss of 5.6%. Market Vectors Uranium + Nuclear Energy ETF gained 2.2% on the week while the Global X Uranium ETF gained 6.5%.
On the long term we are still some distance from any change. Both the Daily and Weekly Indices are still well below their respective long term negative sloping moving average lines. The momentum indicators are starting to improve. Although both are still in their negative zones they are above their trigger lines with the triggers just turning to the up side. The long term volume indicator is moving in a basic lateral path and remains below its negative sloping trigger line. All in all, the long term rating remains BEARISH.
On the intermediate term we are starting to close up the emptiness between go and no-go. The Daily Index just touched the intermediate term moving average line but still closed below the line. The line itself is still in a downward slope. The intermediate term momentum indicator remains in its negative zone but is moving higher and might cross into the positive very soon. It is above its now positive sloping trigger line. As for the volume indicator, it still needs some more work before it crosses above its trigger line, which itself remains sloping negatively. All this still gives us a BEARISH rating for the intermediate term. The short term moving average line, although moving higher, is still below the intermediate term line confirming the present bear.
On the short term we are seeing brightness. The Daily Index is now above its positive sloping short term moving average line. The momentum indicator has now moved into its positive zone and above its positive sloping trigger line. The daily volume action is still pretty low but seems to be improving slowly. Speculators are dipping their toes into the water to see what transpires. This brings us to a BULLISH short term rating. The very short term moving average line has just crossed above the short term line for confirmation of this bull.
Now, what is the immediate prognosis? The direction of motion of the Daily Index is most definitely to the up side and is above its positive very short term moving average line. The aggressive Stochastic Oscillator is well in its positive zone. Unfortunately, the SO is also inside its overbought line which too often results in a reaction of some sort. I would expect the up moves to halt very shortly and maybe come down a notch. I don’t expect such reaction to last too long before the Index continues upwards. For now my guess is that there is a rest period to the move that should start very soon.
A commenter the other day asked about possible guidelines for entry into the uranium stocks. Here are just a few suggestions that can be used anytime.
Understand what you are doing in the market and what the risks are (there are ALWAYS risks). Do not risk capital unless you know what you are doing. Remember, it is YOUR capital. YOU risk it and the gains or losses are YOUR responsibility.
Decide what market discipline works for you and stick to it.
NEVER, NEVER, NEVER invest or speculate against the trend of the stock (or market). You can try gambling against the trend but understand that you ARE gambling whether in pennies or in “quality”.
The trend is your friend. Always invest or speculate with the trend.
Do not get too enamored with volume action unless you truly understand what it is telling you. It could be a very beneficial indicator BUT too often misused by speculators.
Although investing or speculating “with the trend” it is also beneficial to understand if such trend is gaining strength or losing strength. An up trend that is losing strength is prone to a reversal.
The Weekly Table of Technical Information and Ratings is a good place to get much of this technical information. It IS NOT recommendations but a guide towards your final investment or speculative decision. On the left of the front page of this blog there is a link where you will find a tutorial as to how to get the most from these weekly tables.
Hope this helps.