All three major indexes made gains this week for the first time since March 4. The DJI gained 0.55%, the NASDAQ Composite 0.73%, making it the best performer of the week, with the S&P 500 close behind with a gain of 0.71%. On Monday, the DJI found support at its 200 day moving average level and closed higher starting a 4 day run of gains which came to an end with profit taking on Friday. The NASDAQ, which was below its 200 day moving average when the week began, also succumbed to profit taking on Friday, as did the S&P 500. Friday's volume was quite low, however, so the reversal was not a strong cause for concern. The markets' gains were mainly driven by falling oil prices, which trended lower each day this week.

Because newer, more innovative companies, are found in the NASDAQ Composite index, it is that index which is of most interest to followers of the CANTATA methodology. Unfortunately, that index has trended downwards since the start of the year, and our market model has not yet found reason to reverse its current 'exit' signal. The low for the year was reached on March 29 and we would like to see a strong recovery within 10 sessions for our model to issue an 'enter' signal. The 10 days expire on Tuesday of next week.

The number of successful breakouts almost doubled to 25 this week, with the average gain to the end of the week being 4.5% - over six times the market average. RTSX broke out of a poorly shaped handle on Monday to make a maximum gain of 24.3% on Wednesday before closing for a gain of 14.3%. MCRI also had a poorly shaped handle but managed an intraday gain after Thursday's breakout of 17.8% before settling back for an 11.8% gain at Friday's close.

The Healthcare sector produced the most breakouts with a total of 7, followed by Retail with 5.

With the markets trending up, there were fewer confirmed breakdowns this week, just five, with three being from Flat Bases and two from ShortsaleWatch.

Although Oil prices dropped throughout the week, the Oil & Gas Drilling industry group continued to get the highest score in our industry technical rankings, which it has dominated for at least 26 weeks now.

Understanding the CANTATA Evaluator

This week we will describe the components of our CANTATA Evaluator. To place the discussion in context, first look at the CE for our highest scoring stock, as of Thursday, April 7, 2005, Nicholas Financial.

Very early on in the development of the CANTATA Evaluator (CE) we recognized that there are two separate components to the method that are not evident from a simple reading of the CANTATA definitions. These are a technical component, meaning an analysis of the price/volume action of the stock over time, and a fundamental component, referring to the economic strength of the company and its management. We used this insight to break down CANTATA into measurable parts and present them on two separate (X-Y) axes in our ZONE methodology. This left-brain approach to CANTATA analysis makes sense to us, but its significance may not be obvious to those of you who are more holistically and intuitively inclined. So today we offer a cross-reference of CANTATA to our CE ratings.

Now we'll see how this translates to our CANTATA Evaluator.

The result of our CE is a technical score (CET) out of 5 and a fundamental score (CEF) out of 11. The maximum possible combined score is 18.

How do you access the CE for an individual stock?

From the Evaluate > CANTATA Evaluator link you can analyze any stock in our database according to CANTATA principles. Also, Every stock on our watchlists or industry analysis list is linked to its current CE page. There is also a link to the CE on every chart and, as we showed in last week's newsletter, our Database Search can be used to find the top 100.

Additional CE Links on Breakoutwatch.com

• CE Methodology
• CE Scoring
• CE Zone Methodology