After The Close, 23 Oct 2008
Merv’s Daily Uranium Index
Market Data
Open: 105.54
Hugh: 109.98
Low: 97.91
Close: 103.58
Volume: 5822
Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000.
Well, as they say in the technical discipline “if you have very little to say dazzle them with charts”. So, I’ve added a chart to dazzle you.
The P&F chart is one that I show occasionally. It is an instructive chart. It provides another method of determining trend and just about the only method of guessing at a potential projection of a move. As many of you already know I need the chart to break above two previous Xs and above the down trend line to issue a reversal of trend to the bull. We’ve broken above two previous Xs on two previous occasions but on neither had we broken above the down trend line. So we are still in a bear market by this P&F chart. With the units used and the number of units required for a reversal of direction this chart is more an intermediate term chart than any other time period. As for projections, we have had several along the way. All have been met except the latest one which was to the 50 level. That’s based upon that vertical plunge from the 280 level to the 160 level. Should the Index drop below the present support, i.e. by going to the 90 level, then that consolidation pattern would project to zero, and we know that is not going to happen as all stocks would have to go to zero. So, the 50 level looks like it for now. Of course at some point the projection will not be met and a bull market will result.
The Merv’s Daily Uranium Index closed lower by only 1.44 points or 1.37%. Despite the minimal move the winners and losers were lopsided. There were 10 winners and 37 losers with 3 unchanged. Looking at the Index action from another direction, if we calculate the closed per the same method used for the weekly Index, i.e. average performance of all stocks, then we had a significant daily decline of 6.30%. You get a difference in the Index value like today (1.37% versus 6.30%) when you have the low priced stocks make significant moves while the high prices stocks do not. There were 16 low priced stocks with losses in the double digit range. The largest stocks were mixed at the close. Cameco gained 7.2%, Denison lost 1.9%, Paladin lost 6.9%, Uranium One gained 2.4% and USEC lost 5.3%. The best gainer on the day was Trigon Uranium with a gain of 14.3% while we had another tie for the worst loser with Powertech Uranium and Western Prospector both losing 25.0%.
As far as the intermediate and short term indicators and ratings are concerned, nothing has changed from yesterday so both are still rated as BEARISH. The volume indicator is the only difference from the other day and it has now moved into new lows, ahead of the Index doing so. This may be an advance warning of the Index doing exactly that.
For the direction of least resistance, I will continue with the lateral trend until the Index breaks out of the box. As far as the indicators and daily action are concerned, I should actually go Downward but That lower support is just too close.
Hi Merv: Just a question as to why you have Trigon Uranium included in your index? I purchased some trigon stock a number of months ago, as a uranium play only to have it drop with the rest of the pack.Then as potash became the hot commodity they put together a management agreement with a U.S company applying for some potential potash property leases. The stock then jumped up from .12 to .75 cents in a matter of days, at which point I made my exit.I have since read that they were a diamond exploration play prior to becoming a uranium explorer.Not that I mind a company trying to better themselves,but I don't see them as a pure uranium play. Also I'm wondering if you might consider EFR (Energy fuels resources) as a good possible candidate, or If you might have any comments on this company.Thank you in advance for any information, and thank you as well for your commentaries, and your excellent web site. ---Outfitter---
ReplyDeleteOutfitter,
ReplyDeleteYour question about why Trigon is included in the Index is answered on my blog front page at the very top under the heading BASIC NOTES.
As for including Energy Fuels, I am continually monitoring the Index component list and reviewing my directory of over 200 uranium companies. A few times a year the component list is updated so that it includes the top 50 uranium stocks by market value traded on the North American markets. I was putting together a second Index of more speculative stocks but with the devastation going on at this time it is no easy. I also monitor several different stocks that could qualify in the "uranium" category, including stocks from associated industries such as nuclear power companies, ETFs, etc. I have not made up my mind as to their inclusion but with the devastation of so many uranium stocks their inclusion is highly possible in the near future.
"Gold has made it to a new bear market low this past week. Looking at the chart we had two peaks and two valleys and now a third valley. This seems like a bearish Elliott Wave pattern but my knowledge with the Elliott Wave Theory is limited so I wouldn't go into it, although if it is it just might be approaching the end of the pattern and ready for a reversal. As far as the normal indicators are concerned, gold remains below its negative sloping moving average line and the momentum indicator remains in its negative zone below its negative sloping trigger line. The volume indicator seems to be trying to go sideways but remains below its negative trigger line. All in all, nothing here to change the intermediate term rating. It remains BEARISH."
ReplyDeletehttp://www.marketoracle.net/Article6979.html
Have you considered the possibility that comex gold might crash to zero because of fears of defaults while real gold soars?
As I see it, there are two gold markets:
Physical gold market
No counterparty risks and short supply
Paper (comex) gold market
backed by 10% real gold and 90% IOU from large insolvent financial institutions.
Check the eBay prices for gold bullion; they are 300-400 dollars over the spot price (50% premium). There are rumors of a large number of traders planning on taking delivery for December contracts. These rumors make perfect sense given the enormous premiums being paid in the physical market. If even 10% of future holders try to take delivery, it will wipe out COMEX's entire supply of physical gold. Without any real gold behind it, the COMEX gold futures market would lose all credibility.
To me, COMEX gold futures are a joke (futures for actual commodities like oil make more sense). If the financial system collapse and gold soars to 4000, the banks short side of COMEX gold contracts are guaranteed to default. Since the whole point of owning gold is safety and protections against financial catastrophes, why would any reasonable person buy paper gold?
Also, I haven't double checked this, but I have read that the outstanding COMEX futures contracts for silver exceed the world's known supply of silver. If this is true, then silver also presents an enormous danger to COMEX exchange itself.
My blog is:
http://www.marketskeptics.com
eric decarbonnel,
ReplyDeleteThere is a lot here. I checked out your blog site and it's very interesting. That's what makes markets interesting, a divergence of opinions. If everyone was of the same mind we would have no market.
I see you blog is new, I hope you can keep it up.