for week ending 9 December 2011
Merv’s Daily Uranium Index
Market Data for Friday 9 Dec 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.
It could get very frustrating waiting for the next bull market in uranium stocks to get started. I thought I’d see where we have been with these stocks and try to see if we can assess what the future potential could be. My Weekly Index started in Jan 3 of 2003 so that is the furthest back I can go.
From the start of the Weekly Index to its all time high in early 2007 the Index gained 13,510% (yes, there is no period in that number). The 2007/2008 bear market took this Index down 87%. We then had an elongated bull move to the early 2011 high of 517% followed by another bear of 63%, where we are today. Boy, what a roller coaster. Although we are still 130% ahead of the 2008 low we still need another 235% move from here to get back to our previous high. Of course this is an average figure of all the 50 component stocks so many will still do much better while a few will not do as well. The ones not doing as well will probably be the biggies while the more speculative stocks will out perform.
So much for today’s space filler.
Getting back to what’s happening. Last week I showed a couple of charts showing the down trending channel that the Daily Index is trapped inside and the potential reverse head and shoulder pattern developing. Today we see another pattern. This is one of my Merv’s FAN Principle patterns. This one I call the Bullish Decelerating FAN Lines. It’s bullish because the completion of the pattern results in a new bull market. It’s decelerating because the move to lower levels is looking less and less likely as the pattern progresses. The simple criteria for THIS pattern (I have slightly different criteria for other FAN Principle patterns). The breaking of the first FAN trend line means nothing. The breaking of the second FAN trend line suggests the end of the bear trend and the beginning of the bull move. The breaking of the third FAN trend line is confirmation of the new bull move. At the present time we have the second FAN trend line broken while the third is yet to come. So, according to this pattern we are in a new bull market BUT not yet fully confirmed.
Hey, it’s always great to have some good news.
The Merv’s Daily Uranium Index closed on Friday with a gain of 2.60 points or 1.95%. There were 26 daily winners, 13 losers and 11 stocks just twirling their fingers. Cameco gained 2.1%, Denison gained 2.1%, Paladin gained 2.4%, Uranium One lost 0.4% and Uranium Participation was just sitting there twirling its fingers and whistling in the wind. The best daily winner was Crosshair with a daily gain of 16.7% while the loser of the day was Pitchstone with a loss of 4.8%. Market Vectors Uranium + Nuclear Energy ETF gained 2.1% as did Global X Uranium ETF.
For the full week the Merv’s Weekly Uranium Index lost 127.39 points or 2.86% (the Daily lost 1.67% on the week). As we see the speculative stocks took the bigger weekly hit this past week. There were 12 weekly winners, 32 weekly losers and 6 stocks sitting there twirling their fingers and whistling in the wind. Cameco lost 3.0% on the week, Denison lost 2.0%, Paladin broke even, Uranium One gained 1.7% and Uranium Participation gained 0.2%. The best weekly winner was #308 Corp. with a gain of 21.2% while the loser of the week was Wealth Minerals with a loss of 17.1%. Market Vectors Uranium + Nuclear Energy ETF lost 0.3% on the week while Global X Uranium ETF lost 0.8%.
Nothing much has changed from the long term perspective. Although it looks like the Indices and momentum indicators are in a stabilizing mode it will still take some more time before we can expect any long term upgrade in their performances. So, from a long term stand point I wouldn’t go into the details but say that for both Indices the long term rating, at the Friday close, remains BEARISH.
Although there is very little change in the intermediate term indicators things are getting close so let’s see where we are.
Trend: The Daily Index is trading just below its intermediate term moving average line and the line slope continues to the down side although the slope is getting less and less negative.
Strength: The intermediate term momentum indicator continues to strengthen but still remains in its negative zone. It is, however, once more above its trigger line and the trigger is pointing upwards.
Volume: The volume indicator continues to move in a basic lateral direction but has now crossed above its trigger line and the trigger has turned to the up side.
Despite the positive volume indicator we still get a BEARISH rating at the Friday close. This rating is confirmed by the short term moving average line remaining below the intermediate term line.
Trend: The Friday close was just above the short term moving average line with the line slope turning upwards.
Strength: The short term momentum indicator remains just below its neutral line in its negative zone and just below its negative sloping trigger line.
Volume: The daily volume action continues to be low suggesting that the major speculators are not yet enamored with the uranium stocks.
We need just a little more strength in the momentum indicator before we can go bullish. For now the short term rating, at the Friday close, is + NEUTRAL. The very short term moving average line remains above the short term line suggesting that maybe the bull is only another day away.
As for the immediate direction of least resistance, it looks like the pressure is towards the up side with the Friday action ending upward and the Stochastic Oscillator turning towards the up side, although not fully yet.