Merv’s Weekly Uranium Review
for week ending 25 November 2011
Merv’s Daily Uranium Index
Market Data for Friday 25 Nov 2011
Open: 128.56
High: 130.60
Low: 126.85
Close: 128.12
Volume: 1459
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.
Every now and then I like to look back to see where we have been. This week’s long term charts (posted earlier) once more take us right back to their respective beginnings, the Weekly Index from the start of 2003 and the Daily Index from late 2006. We can only compare their respective performances since late 2006 as the Daily only started then. What we see here is basically the same as what I have seem in the precious metal stocks (gold and silver) when comparing the performance of the speculative stocks versus the performance of the “quality” stocks.
As long time readers to these commentaries remember, the Weekly Index is most influenced by the low priced (speculative) stocks while the Daily Index is most influenced by the high priced (quality) stocks. Both Indices have the very same set of 50 component stocks.
From their highs in 2007 to their lows in late 2008 BOTH Indices lost just about the same percentage, the Weekly lost 87% while the Daily lost 84%. From the 2008 lows to their peaks in early 2011 the Weekly gained 517% while the Daily gained only 205%. Now, from their early 2011 high to the present the Weekly has lost some 66% and the Daily lost 55%. When one views the significantly higher upside potential of the speculative stocks versus the quality stocks and then you see that they BOTH decline about the same amount during a bear market, which class of stocks are you interested speculating in (and ALL uranium stocks are speculations)?
Of course, as technicians or those who follow the technical discipline, one would not be holding the stocks all the way down praying for a quick recovery while one would be holding the stocks as they continued their climb during a bull market. The net result should be even more spectacular than the Weekly Index itself would suggest.
As the saying goes, “you buy the performers and dump the bummers”.
Now, back to our normal weekly commentary.
What can I say? It was a bummer of a week for uranium stocks with both the Weekly and Daily Indices falling by about 9%. It looks more and more like we’re in for a test of the early Oct low although we just might not get that far as the Daily Index short term momentum indicator has already entered its oversold zone from where previous rallies have occurred.
On Friday the Merv’s Daily Uranium Index closed lower by 0.93 points or 0.72%. There were 14 daily winners, 23 losers and 13 stocks that didn’t have a clue which way they wanted to go. Looking at the five largest stocks in the Index, Cameco lost 0.8% on the day, Denison gained 1.6%, Paladin lost 2.7%, Uranium One lost 0.5% and Uranium Participation didn’t have a clue which way to go. The best daily winner was Benton with a gain of 11.8% while the loser of the day way Strathmore with a loss of 10.7%. Market Vectors Uranium + Nuclear Energy ETF lost 0.5% while Global X Uranium ETF lost 0.7%.
For the full week the Merv’s Weekly Uranium Index lost 412.90 points or 8.83% (the Daily Index lost 9.07% on the week). There were only 2 weekly winners but a whole bunch of losers (45 of them). There were 3 stocks that didn’t have a clue which way to go. Cameco lost 10.4% on the week, Denison lost 16.2%, Paladin lost 7.6%, Uranium One lost 11.6% and Uranium Participation lost 5.1%. A slaughter all the way around. The best weekly winner (of those brave 2) was Kivalliq Energy with a gain of 8.6% while the loser of the week was Uranerz Energy with a loss of 22.3%. Market Vectors Uranium + Nuclear Energy ETF lost 7.3% while Global X Uranium ETF lost 10.6%.
LONG TERM
Trend: The long term trend remains negative with both the Daily and Weekly Indices moving lower below their respective negative sloping long term moving average lines.
Strength: The long term momentum indicators for both Indices remain in their negative zones and below their respective negative sloping trigger lines. At the present time there is no real sign of either strength or weakness in this indicator versus the performance of the Index itself.
Volume: The volume indicator has been tracing a basic lateral path although it did move slightly above its long term trigger line the other week. It is once more below its trigger and the trigger continues to point in a downward direction.
Putting it all together one can only give the long term a rating of BEARISH at the Friday close.
INTERMEDIATE TERM
Trend: The Daily Index continues to move lower and lower and heading towards a test of the 118 early Oct low. It remains below its intermediate term moving average line and the line continues to slope in a downward direction.
Strength: The intermediate term momentum indicator almost reached its neutral line about a month ago but has been reacting lower ever since. It remains in its negative zone and below its negative sloping trigger line. A close look at the indicator might suggest that it is not quite as weak as the price action might suggest but let’s wait and see how it develops.
Volume: For the past two months the volume indicator has been trending higher but this week it fell below a well established intermediate term up trend line and down it goes. It is also below its now negative trigger line.
On the intermediate term BEARISH is the only rating I can give, at the Friday close. This bear is further confirmed by the short term moving average line tracking below the intermediate term line.
SHORT TERM
This is where one would expect new trends to show up first. Unfortunately, nothing new is yet showing up.
Trend: The short term trend collapsed a month ago and since then it has been a downer all the way. The Daily Index remains below its negative sloping short term moving average line. There is a little hint that the slide may be about to end, if only on a very short term basis, but it is a very little hint and needs more confirmation before jumping for joy.
Strength: The short term momentum indicator has been in a steady decline for the past month and remains in its negative zone below its negative sloping trigger line. The indicator may or may not already be in its oversold zone. The level used as the oversold level can be fluid with different stocks or Indices and depends upon the volatility of the on going market action. Most software programs automatically use 30% as the oversold level while I am inclined to often use 20% for more volatile stocks or Indices. In one case the momentum indicator is not quite in its oversold zone while in the other case it already has entered the zone. In whatever case, it is at a level where one can start looking forward to a rebound of some sort.
Volume: The daily volume action has been pretty low during the week. This may be due to the American’s taking some time off to celebrate their Thanksgiving or it just might be some additional effect due to my component stock revision this past week. I had deleted 5 stocks and introduced 5 new ones. Their volume actions may not have been directly replaced. In any case the volume during the week was low and this, under most negative days, would not be a surprise.
Putting it all together the short term rating at the Friday close is BEARISH. This bear is confirmed by the very short term moving average line moving ever lower below the short term line.
As for the immediate direction of least resistance, I’m going to go with the up side for the next few days. Although there is no clear sign of a trend reversal yet there are some hints that the Daily Index and Stochastic Oscillator are strengthening and may be wanting to reverse. You pays your money and you get the bold predictions (of course, if the Indices should continue to decline we WILL forget about this prediction, wouldn’t we?)
Yes I know, it’s frustrating as hell this continual negative market BUT looking at the long term Weekly Index we can guess that once the stocks finally do bottom there will be some really, really great gains to be made for those who have waited.
for week ending 25 November 2011
Merv’s Daily Uranium Index
Market Data for Friday 25 Nov 2011
Open: 128.56
High: 130.60
Low: 126.85
Close: 128.12
Volume: 1459
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.
Every now and then I like to look back to see where we have been. This week’s long term charts (posted earlier) once more take us right back to their respective beginnings, the Weekly Index from the start of 2003 and the Daily Index from late 2006. We can only compare their respective performances since late 2006 as the Daily only started then. What we see here is basically the same as what I have seem in the precious metal stocks (gold and silver) when comparing the performance of the speculative stocks versus the performance of the “quality” stocks.
As long time readers to these commentaries remember, the Weekly Index is most influenced by the low priced (speculative) stocks while the Daily Index is most influenced by the high priced (quality) stocks. Both Indices have the very same set of 50 component stocks.
From their highs in 2007 to their lows in late 2008 BOTH Indices lost just about the same percentage, the Weekly lost 87% while the Daily lost 84%. From the 2008 lows to their peaks in early 2011 the Weekly gained 517% while the Daily gained only 205%. Now, from their early 2011 high to the present the Weekly has lost some 66% and the Daily lost 55%. When one views the significantly higher upside potential of the speculative stocks versus the quality stocks and then you see that they BOTH decline about the same amount during a bear market, which class of stocks are you interested speculating in (and ALL uranium stocks are speculations)?
Of course, as technicians or those who follow the technical discipline, one would not be holding the stocks all the way down praying for a quick recovery while one would be holding the stocks as they continued their climb during a bull market. The net result should be even more spectacular than the Weekly Index itself would suggest.
As the saying goes, “you buy the performers and dump the bummers”.
Now, back to our normal weekly commentary.
What can I say? It was a bummer of a week for uranium stocks with both the Weekly and Daily Indices falling by about 9%. It looks more and more like we’re in for a test of the early Oct low although we just might not get that far as the Daily Index short term momentum indicator has already entered its oversold zone from where previous rallies have occurred.
On Friday the Merv’s Daily Uranium Index closed lower by 0.93 points or 0.72%. There were 14 daily winners, 23 losers and 13 stocks that didn’t have a clue which way they wanted to go. Looking at the five largest stocks in the Index, Cameco lost 0.8% on the day, Denison gained 1.6%, Paladin lost 2.7%, Uranium One lost 0.5% and Uranium Participation didn’t have a clue which way to go. The best daily winner was Benton with a gain of 11.8% while the loser of the day way Strathmore with a loss of 10.7%. Market Vectors Uranium + Nuclear Energy ETF lost 0.5% while Global X Uranium ETF lost 0.7%.
For the full week the Merv’s Weekly Uranium Index lost 412.90 points or 8.83% (the Daily Index lost 9.07% on the week). There were only 2 weekly winners but a whole bunch of losers (45 of them). There were 3 stocks that didn’t have a clue which way to go. Cameco lost 10.4% on the week, Denison lost 16.2%, Paladin lost 7.6%, Uranium One lost 11.6% and Uranium Participation lost 5.1%. A slaughter all the way around. The best weekly winner (of those brave 2) was Kivalliq Energy with a gain of 8.6% while the loser of the week was Uranerz Energy with a loss of 22.3%. Market Vectors Uranium + Nuclear Energy ETF lost 7.3% while Global X Uranium ETF lost 10.6%.
LONG TERM
Trend: The long term trend remains negative with both the Daily and Weekly Indices moving lower below their respective negative sloping long term moving average lines.
Strength: The long term momentum indicators for both Indices remain in their negative zones and below their respective negative sloping trigger lines. At the present time there is no real sign of either strength or weakness in this indicator versus the performance of the Index itself.
Volume: The volume indicator has been tracing a basic lateral path although it did move slightly above its long term trigger line the other week. It is once more below its trigger and the trigger continues to point in a downward direction.
Putting it all together one can only give the long term a rating of BEARISH at the Friday close.
INTERMEDIATE TERM
Trend: The Daily Index continues to move lower and lower and heading towards a test of the 118 early Oct low. It remains below its intermediate term moving average line and the line continues to slope in a downward direction.
Strength: The intermediate term momentum indicator almost reached its neutral line about a month ago but has been reacting lower ever since. It remains in its negative zone and below its negative sloping trigger line. A close look at the indicator might suggest that it is not quite as weak as the price action might suggest but let’s wait and see how it develops.
Volume: For the past two months the volume indicator has been trending higher but this week it fell below a well established intermediate term up trend line and down it goes. It is also below its now negative trigger line.
On the intermediate term BEARISH is the only rating I can give, at the Friday close. This bear is further confirmed by the short term moving average line tracking below the intermediate term line.
SHORT TERM
This is where one would expect new trends to show up first. Unfortunately, nothing new is yet showing up.
Trend: The short term trend collapsed a month ago and since then it has been a downer all the way. The Daily Index remains below its negative sloping short term moving average line. There is a little hint that the slide may be about to end, if only on a very short term basis, but it is a very little hint and needs more confirmation before jumping for joy.
Strength: The short term momentum indicator has been in a steady decline for the past month and remains in its negative zone below its negative sloping trigger line. The indicator may or may not already be in its oversold zone. The level used as the oversold level can be fluid with different stocks or Indices and depends upon the volatility of the on going market action. Most software programs automatically use 30% as the oversold level while I am inclined to often use 20% for more volatile stocks or Indices. In one case the momentum indicator is not quite in its oversold zone while in the other case it already has entered the zone. In whatever case, it is at a level where one can start looking forward to a rebound of some sort.
Volume: The daily volume action has been pretty low during the week. This may be due to the American’s taking some time off to celebrate their Thanksgiving or it just might be some additional effect due to my component stock revision this past week. I had deleted 5 stocks and introduced 5 new ones. Their volume actions may not have been directly replaced. In any case the volume during the week was low and this, under most negative days, would not be a surprise.
Putting it all together the short term rating at the Friday close is BEARISH. This bear is confirmed by the very short term moving average line moving ever lower below the short term line.
As for the immediate direction of least resistance, I’m going to go with the up side for the next few days. Although there is no clear sign of a trend reversal yet there are some hints that the Daily Index and Stochastic Oscillator are strengthening and may be wanting to reverse. You pays your money and you get the bold predictions (of course, if the Indices should continue to decline we WILL forget about this prediction, wouldn’t we?)
Yes I know, it’s frustrating as hell this continual negative market BUT looking at the long term Weekly Index we can guess that once the stocks finally do bottom there will be some really, really great gains to be made for those who have waited.
3 comments:
Hi Merv,
Pleaes elaborate on your comment:
"The net result should be even more spectacular than the Weekly Index itself would suggest."
Anonymous,
The Index measures the weekly average performance of all component stocks, that includes those that are moving lower as well as those that are moving higher. Technically, one should be only in those stocks that are moving higher and when they turn around you get out and put your capital to work into the next stock that is moving higher. You elliminate, to a great extent, the loser stocks in your trading. The performance should therefor be better than if you included the losers as the Index does.
Marv,
Thanks for calrifying. I mess read (freudian slip) thinking that "spectacular" was in reference to the futhure.
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