Merv's Daily Commentary, 10 Dec 2008

After The Close, 10 Dec 2008

Merv’s Daily Uranium Index
Market Data

Open: 113.34
High: 119.22
Low: 110.04
Close: 116.71
Volume: 8166

Note that the volume is an average volume of round lot sales for the 50 component stocks. For total volume, multiply by 5000.

Well, things are starting to look brighter. Without further adieu let’s get right into it.

The Merv’s Daily Uranium Index closed higher by 5.60 points or 5.04%. There were 27 winners, 17 losers and 6 going nowhere. Still not the winning ratio I’d like to see but it seems to be heading in the right direction. Of the five largest stocks, Cameco gained 6.9%, Paladin gained 7.0%, Uranium One gained 34.6%, Uranium Participation lost 1.9% and USEC gained 5.4%. The best gainer was Azimut Exploration with a gain of 34.7% beating out Uranium One by only 0.1%. The worst performer on the day, well there were three of them with the same % decline. Bayswater Uranium, Nuinsco and Wescan Goldfields all lost 16.7%.

Things are now happening fast in the intermediate term. The Daily Index has broken above its intermediate term moving average line although the line itself is still pointing downward. That should change in a few more days providing things continue to look positive. The intermediate term momentum indicator, which has been showing us strength for some time now, continues in its negative zone but remains above its positive trigger line. It is heading upwards rapidly. The volume indicator is still our laggard. It continues in a basic lateral direction but seems to be showing slightly less enthusiasm for the up side than the Index or the momentum indicator. Although the Index closed at its highest level in over a month and the momentum indicator is at its highest level since mid July the volume indicator is still some distance below its late Nov high. However, from my reading of the indicators, and although I would still like to see the moving average line turn to the up side, summing the indicators together today I get a + NEUTRAL rating for the intermediate term. This is just one level below a full bull. To go to a full bullish rating I would need either the momentum indicator to climb into its positive zone OR the moving average line to turn upwards.

On the short term we are already in a bullish trend. We just got stronger today. The Index closed higher today and is at its highest close for the past month. It remains above its positive moving average line. The momentum indicator is moving sharply higher and is at its highest since late June. It too is above its positive trigger line. The daily volume action is showing signs of life today but I’d want to see several days of good volume action before it becomes classified as a positive trend. All in all, the short term rating remains BULLISH.

As for the immediate direction of least resistance, the Stochastic Oscillator is moving up sharply and about to enter its overbought zone. I’ll probably comment on this action a little more once I see it enter the zone and how it acts in that area. The direction of least resistance for the Index is to the up side, but there is still that upper box resistance to overcome. One negative to be concerned about is the price of uranium. It dropped $1.00 this week and looks to be heading back into lower prices. If it continues then it may have a negative impact on the stocks and cool the present rally.