Merv's Weeklt Uranium Commentary 2 Dec 2011

Merv’s Weekly Uranium Review
for week ending 2 December 2011

Merv’s Daily Uranium Index
Market Data for Friday 2 Dec 2011

Open: 139.25
High: 141.22
Low: 136.74
Close: 138.04
Volume: 2336

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 week started good but sort of fizzled out near the end. Still, weekly Index gains were pretty good and no need to complain. Is this the start of another bull move attempt? Well it just might be. Today, I show both the intermediate and short term charts here (the long term were posted earlier). One can draw so many lines on one chart that it just got too confusing so the various lines were split between the two charts, where most appropriate.

Looking at the intermediate term chart we have a well defined down trending channel that has defined the trend since just after the March tsunami plunge. Other than the normal indicators this channel seems to be the first pattern to overcome. That would come at about the 150 level.

We have two resistance lines on the intermediate term chart. One at the 140 level seems to be on the verge of being overcome. The other at the 160 level is the more serious one. Before this one is overcome we would have already crossed above the long term moving average line. Moving through the 160 line itself just might represent the time when the long term moving average turns to the up side.

Going to the short term chart answers the question if we are about to reverse the bear trend. We have a well defined reverse head and shoulder pattern shown on this chart. I like two see at least two things happening to confirm in my mind that we are looking at reverse head and shoulder in the development stage. First, I like to see that the distance from the start of the bear to the bottom of the head is at least two times the distance from the neckline to the head bottom. Here, it’s multiple times that. The next is I like to see a positive divergence at the head. This we have. Also the momentum continues to improve as the pattern unfolds from the head. All this points to a reverse head and shoulder pattern developing with confirmation at the neckline break, which will be at about the 150-155 level. On the break the pattern will most likely project this move to the 192 level.

So much for the charts, let’s get back to our usual analysis.

The Merv’s Daily Uranium Index closed on Friday with a gain of 0.71 points or 0.51%. There were 21 winners, 16 losers and 13 stocks bumming around. Cameco gained 1.8% on the day, Denison gained 2.1%, Paladin was just bumming around, Uranium One gained 0.9% and Uranium Participation was a loser by 0.2%. The best winner of the day was Azimut with a gain of 14.3% while the loser of the day was JNR with a loss of 6.7%. Market Vectors Uranium + Nuclear Energy ETF lost 0.4% while Global X Uranium ETF lost 0.3%.

For the full week the Merv’s Weekly Uranium Index gained 197.33 points or 4.63% (the Daily Index gained 7.74% on the week). It was a “quality” week. There were 30 weekly winners, 16 losers and 4 stocks just bumming around. Cameco gained 11.5% on the week, Denison gained 15.5%, Paladin gained 18.6%, Uranium One gained 7.7% and Uranium Participation gained 2.3%. The best weekly winner was Strathmore with a weekly gain of 25.3% while the loser of the week was JNR with a weekly loss of 12.5%. Market Vectors Uranium + Nuclear Energy ETF gained 7.3% while Global X Uranium ETF gained 10.4%.

LONG TERM

Once again the long term remains unchanged. The Indices are below their long term negative sloping moving average lines and the momentum indicator remain in their negative zones. The volume indicator remains weak and is below its long term trigger line. The long term rating remains BEARISH at the Friday close.

INTERMEDIATE TERM

Trend: It’s getting close but the Daily Index didn’t quite make it above the line. It closed on Friday just below its still negatively sloping intermediate term moving average line.

Strength: The intermediate term momentum indicator remains in its negative zone but has once more moved above its trigger line and the trigger has turned back to the up side.

Volume: The volume indicator continues in a basic lateral direction but is slightly below its intermediate term trigger line.

All in all the intermediate term rating at the Friday close remains BEARISH although it might be very close to some improvement. This bear is confirmed by the short term moving average line remaining below the intermediate term line.

SHORT TERM

Trend: The Daily Index moved above its short term moving average line during the week and the line has turned to the up side.

Strength: The short term momentum indicator is butting its head up against its neutral line but unfortunately is finished the week just slightly below the neutral line in its negative zone. It is, however, above its positive sloping trigger line.

Volume: The daily volume action remains low and not encouraging at this point.

For the short term the rating at the Friday close is BULLISH despite the negative momentum indicator. The very short term moving average line is heading upward fast and is touching the short term average BUT not quite moving above it yet, so, no confirmation from this source. One more day will do it.

As for the immediate direction of least resistance, I’m going with the lateral to negative for the next few days. The Stochastic Oscillator is in its Overbought zone and in the process of turning. The Daily Index has stopped moving upwards. Putting those two together it does not look too good for the next couple of days, but who knows, this is primarily a guess.