Market Summary

The onset of wintery weather caused energy prices to rise this week and rising with them was the fear of inflation leading to higher interest rates. Energy prices retreated somewhat on Friday and this, along with more evidence of growing consumer confidence from the University of Michigan, permitted a small recovery. For the week overall, however, all the major indexes were in retreat. This was the second week of losses in succession for the DJI and S&P 500, while the NASDAQ suffered its first losing week in eight. Investors will get an indication of the Federal Reserve's outlook for interest rates and the economy as a whole when the Open Markets Committee meets on Tuesday. Investors will be hoping for an indication that an end to interest rate increases is in sight.

The current rally began on October 13 and between its low on that date and the high set on December 2, the NASDAQ Composite rose 12.5%. After such a spectacular rise, a pull-back was only to be expected and a period of consolidation is now probable. We were bullish on prospects for the NASDAQ last week and once recent gains are digested we expect it will move higher again. The evidence comes from a further test of support at the upper edge of the rising wedge pattern we drew attention to last week. On Thursday the NASDAQ dipped to that level intraday but recovered and moved higher again on Friday. The rising wedge is a bearish pattern, however, and if support is tested again and broken we could see the NASDAQ slip to around 2100, or about 7% below current levels, but still over 5% higher than October's low.

The number of successful breakouts was once again above average this week at 41, with an average gain for the week of 2.6% showing once again that breakout stocks easily outperform the market. Seven breakouts made double digit breakout gains. Our subscribers were alerted to these as they broke out and had opportunities to make significant 1 day profits. BOOM gained 17.1%, GGR 16.98%, CFK 16.27%, SIFY 13.35%, CERS 11.41%, BTM 14.29% and PRVD 10.21%. BOOM slipped back to a just within range 4.8% over its pivot. BOOM is one of the top performing breakouts this year having risen 400% since its breakout in February.

Oil and Gas was the most active sector for breakouts with six coming from that group while the Internet sector contributed 5 breakouts.

Update - When to Sell

We had hoped to release several new features this week:

• a 'Sell Consultant' whereby you would enter a symbol, buy price and date and we would respond with our sell model's opinion to sell or hold.
• a 'Sell Alert' module that would allow you to create sell watchlists and we would then alert you by email when a sell signal was generated.
• a checkbox on each symbol on the history pages of the Breakoutwatch for Traders service that would invoke the sell alert process.

Unfortunately, testing and generating supporting performance data and help documentation took much longer than expected, so we are not able to release these features as planned. We expect to have better news next week.

When we release these features, we will open up the Breakoutwatch for Traders page to Silver and Gold subscribers so they can appreciate the power of the new features.

Also, as a reward to loyal Platinum subscribers who have been with us for at least 12 months, or who have a current 12 month subscription as of December 31, 2005, this service will be free for 3 months when it comes off beta test on January 3, 2006.

Competition

The competition to rename the Breakoutwatch for Traders service runs until next Friday, December 16. Send your entries to mike@breakoutwatch.com.

Investment Advisors Using our Service

If you are interested in basing part of your investment strategy on our service, but do not have the time, experience or confidence to do so on your own account, then consider using an investment advisor.

TradeRight Securities, located in a suburb of Chicago, is a full services investment management company and broker/dealer. They have been a subscriber, and user, of BreakoutWatch.com for some time now. They practice CANTATA and use Breakoutwatch.com as a “research analyst”.

They also provide:

• A hands-on approach through personalized service
• On-going communication, guidance, and consultation
• An environment that working together with their clients will help them reach their financial goals

You can learn more about TradeRight Securities at: www.traderightsecurities.com. If you’re interested in speaking to a representative, simply call them toll-free at 1-800-308-3938 or e-mail gdragel@traderightsecurities.com.