Merv's Daily Commentary, 18 Dec 2008

After The Close, 18 Dec 2008

Merv’s Daily Uranium Index
Market Data

Open: 118.21
High: 120.85
Low: 107.70
Close: 111.12
Volume: 6955

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

The markets were horrible today but the uranium stocks held up pretty well. The Index is still inside that box and still basically in the middle of its vertical range. It has a lot of room to drop before making the move significant and going into new lows. Of course there is also room on the top so that it will take some time to reach any break-out either way.

As mentioned yesterday the Toronto Exchange was down for most of the day. Although many of the stocks did trade a few trades before the shut-down it would have been erroneous to use that little information to calculate a day’s activity. Today, the data reflects the Index move versus the Tuesday’s data. In other words the Wednesday action is wrapped up inside today’s data. The Merv’s Daily Uranium Index closed lower by 6.66 points or 5.65% (versus Tuesday). (The actual decline of an average stock was 1.34%.) There were 18 winners, 29 losers and 3 going nowhere. Not actually that bad considering what the general markets did. As for those five largest stocks, Cameco lost 8.8%, Paladin lost 12.1%, Uranium One lost 7.6%, Uranium Participation lost 7.7% and USEC lost 3.9%. By the looks of it the major losses were primarily in the high priced stocks. The best performer since the Tuesday close was Crosshair Exploration with a gain of 30.0% while the worst performer was Pele Mountain with a loss of 20.0%.

Although we continue to be inside that box with a lateral trend, such a trend raises havoc with the indicators. In this lateral trend situation the Index and indicators have a nasty habit of enough volatility to keep moving above and below their moving average lines. So we have it with the intermediate term. The Daily Index closed below its moving average line once again and the line remains pointing to the down side. The momentum indicator is a little stronger and is still very slightly above its trigger line with the trigger still in an upward direction. It is still in its negative zone, however. The volume indicator continues as it has for some time, in a lateral direction. It is very close to its previous low and could go into new low territory with another day or two of negative action. All in all, the intermediate term rating has been down graded to a BEARISH rating.

On the short term things change quickly. The Index closed below its short term moving average line and the line slope just turned back to the down side. The momentum indicator moved below its trigger line and has turned downward. The momentum has also closed below its neutral line into its negative zone. All of a sudden we go from a bullish rating back into a BEARISH rating.

As for the direction of least resistance, despite the downward move today I think I’ll still stick with the lateral trend as the one with the least resistance.