BreakoutWatch.com Weekly Review

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Market Summary

Weekly Breakout Report

Top Breakout Choices

Top 2nd Chances

New Features

Tip of the Week

Prior editions of this newsletter with our valuable Tips of the Week are available here.

Weekly Commentary

As the recovery proceeds companies prefer to make productivity improvements by investing in technology before people. This is one reason why we can have a recovery at the same time as the economy continues to lose jobs. It also explains why earnings expectations for technology companies are higher than for the rest of the market, which goes some way to explaining why the NASDAQ Composite has vastly outperformed the S&P 500 for the year (36% gain vs 20%).

The NASDAQ's gains have come in a series of spurts followed by a short period of consolidation. Our equivolume chart of the NASDAQ Composite for the last four weeks shows that the beginning of October marked the beginning of another of those spurts with consolidation now beginning again.

equivolume chart

The 9 month NASDAQ daily chart shows that we have seen this pattern several times now. The chart below shows the 1-standard deviation and 2-standard deviation Bollinger Bands. What we observe is that there are periods of two to three weeks where the index rides up the upper range but starts to correct as soon as the price falls to within the 1-standard deviation band. At that point the price slides until it hits the lower 2-standard deviation boundary but then quickly reverses to start to rise again. Note how long the periods of up trend are with relatively slow rollovers to consolidation compared to rapid reversal when the lower band is breached.

The inference from this is that one should hold (that is not take out new positions) once the index falls to within the 1-standard deviation band - as it has now - and then start to add to holdings when the index reverses in the outer bottom band. If the index falls below its 50 dma, as it did in early July, then it would be prudent for it to wait until it has recovered above the 50 dma.

There are no guarantees of course that the future will be like the recent past but this is a reasonable assumption until the index closes consistently below its 50 day moving average.

New Features this Week

Additional Value that we added this week

No new features this week.

This Week's Top Tip

Tips for getting the most out of our site

The weekly commentary contains this weeks tip.

Market Summary

Overview of market direction and industry rotation

Index

Value

Change Week

Change YTD

Trend

Dow

9995.91

1.33%

13.9%

Down

NASDAQ

2156.8

0.82%

36.76%

S&P 500

1087.68

1.51%

20.42%

Russell 2000

616.18

0.2%

23.37%

Wilshire 5000

11219.4

1.37%

23.46%

1 Week	13 Weeks	26 Weeks	Year-to-Date
Best Performing Index
S&P 500 1.51 %	Russell 2000 14.32 %	NASDAQ Composite 28.91 %	NASDAQ Composite 36.76 %
Best Performing Industry (by average technical score over each period)
1 Week	3 Weeks	13 Weeks	26 Weeks
Publishing - Newspapers	Home Furnishing Stores	Auto Dealerships	Auto Parts Stores
Most Improved Industry (by change in technical rank²)
Aluminum + 54	Aluminum + 99	Long Distance Carriers + 213	Long Distance Carriers + 210
Charts of each industry rank and performance over 12 months are available on the site

¹The Market Signal is derived from our proprietary market model. The market model is described on the site.
²The site also shows industry rankings based on fundamentals, combined technical and fundamentals, and on price alone. The site also shows daily industry movements.

Weekly Breakout Report

How confirmed breakouts performed this week

# of Breakouts		Period Average¹	Max. Gain During Period²	Gain at Period Close³
This Week	8	13.23	5.03%	2%
Last Week	9	14.69	15.1%	9.03%
13 Weeks	173	15.23	21.07%	10.85%

¹The average number of breakouts in each week over the previous 13 weeks.
²This represents the return if each stock were bought at its breakout price and sold at its intraday high.
³This represents the return if each stock were bought at its breakout price and sold at the most recent close.

Top Breakout Choices

Stocks on our Cup-and-Handle list with best expected gain if they breakout