Merv's Week-End Commentary, 14 Dec 2008

Merv’s Weekly Uranium Review
for week ending 12 December 2008

Merv’s Daily Uranium Index
Market Data for Friday 12 Dec 2008

Open: 113.56
Hugh: 120.05
Low: 108.97
Close: 116.49
Volume: 5123

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

My Daily Index only goes back a little over two years but over that period we have not had a “box” pattern as we have today. This box has now gone two and a half months and doesn’t look like it wants to break out any time soon. Once it does break out we should expect a very good and strong move, in whichever direction. The intermediate term momentum is suggesting upside strength but the volume indicator is blah. It is just moving sideways and resting at almost its low point looking ready to break into new lows. So, the only thing we can do is watch and wait and be ready to act.

Friday was another blah type day with the Merv’s Daily Uranium Index closing higher by only 0.33 points or 0.28%. That’s really a nothing move. There were 18 winners, 24 losers and 8 going nowhere. Of the five largest stocks by market value Cameco gained 1.0% on the day, Paladin lost 0.5%, Uranium One gained 2.3%, Uranium Participation gained 1.2% and USEC gained 7.7%. The best gainer on the day was Azimut Exploration with a gain of 25.0% while the loser of the day was Energy Fuels with a loss of 13.3%.

For the week as a whole, the Merv’s Weekly Uranium Index closed up by 79.50 points or 3.91%. Not a great week but still on the up side. As for winners and loser, it was a stalemate. There were 23 winners and 23 losers with 4 going nowhere. As for those five largest stocks, Cameco gained 16.2%, Paladin gained 14.4%, Uranium One gained 28.3%, Uranium Participation gained 12.3% and USEC gained 19.0%. So, it was a good week for the largest stocks. As for the best and worst, the best winner on the week was Fronteer Development with a weekly gain of 48.4% while the loser of the week was Energy Fuels with a weekly loss of 31.6%.

I usually go to the weekly chart and get my long term information from the Weekly Index. I thought I’d check the Daily Index today to see if it might be giving us a different story but it’s not. The Index (Weekly and Daily) is still some distance below its long term negative sloping moving average line. The long term momentum indicator is still well inside its negative zone but is attempting to move higher and the Daily chart has the momentum above its positive trigger line. The volume indicator is moving sideways and remains below its negative sloping trigger line. All in all, nothing here to change the rating. The long term rating remains BEARISH.

Going to the daily chart we see the Index moved above its intermediate term moving average line on Wednesday and remains above. However, the line slope is still negative. The momentum indicator continues to show strength by moving ever higher, however, it is still in its negative zone but is above its positive trigger line. The lateral volume indicator remains just below its negative sloping trigger line. With the Index above its moving average line we are not totally bearish. We improved our rating slightly the other day and it remains at a + NEUTRAL level.

Short term things happen faster, but they were not happening on Friday. The Daily Index remains above its positive sloping moving average line and the momentum indicator remains in its positive zone above its positive trigger line. Only the volume is not helping. It remains at a low level and not providing any real strength yet. From the indicators the short term rating remains BULLISH.

As for the immediate direction of least resistance, with the Index trapped inside that box one cannot look ahead more than a few days before the box influences its move. For now, the Index seems to be in a lateral phase while the aggressive Stochastic Oscillator (SO) seems to be showing signs of weakness. It has reversed direction from a lower level than earlier. and has crossed its trigger line to the down side, although the trigger is still pointing upwards. I will once more chicken out and go with the lateral direction as the least resistance.