Market Summary

Entering into this week, investors were anxious that the new year rally could not be maintained unless 4th quarter earnings at least met analysts' expectations. Their anxiety was raised on Wednesday when Yahoo and Intel failed to meet expectations but allayed on Thursday when eBay and AMD reported solid earnings. Gloom spread across the markets on Friday, though, as GE and Citigroup disappointed and crude oil prices rose sharply in response to the Iran situation and Al Qaeda threats. There was no respite during the day FRiday as the markets fell all day to close at or near their lows. The result for the week was heavy losses for the major indexes as the DJI lost 2.67% to close lower for the year, the NASDAQ lost 2.99% leaving it just 1.92% higher for the year after reaching almost 5% on January 11 and the S&P 500 gave up 2.03% leaving it just 1.06% higher for the year.

Turning to the situation on the NASDAQ we see a bearish picture emerge. The index has now crashed through the rising wedge pattern that it rode above for so long. It has also broken through the most recent support level at 2332 and fallen to just below its 50 day moving average.



To understand where it might go next, our models give a conflicting picture. On the one hand, our market model is still signaling 'enter' as there have been only two distribution days in the last fifteen sessions (and only one this year) whereas our sell model issued a sell signal after Friday's close. I am going to put more reliance on the market model because I understand the models' inner workings.

The number of successful breakouts from our watchlists dropped slightly to 40 this week and the average gain by weeks end was a losing -0.2% although still very comfortably outperforming the major indexes.

Our new TradeWatch lists are performing very well. Our TradeWatch Best Return list has averaged a 9.8% return since the start of the year.

Machinery Construction/Mining again topped our list of top ranked industries based on our Technical Criteria while Auto & Truck Replacement Parts was the most improved industry in our rankings.

TradeWatch Revised Documentation

Coinciding with the release of the enhanced Sell Alert functionality, we have fully revised and brought up to date the documentation on TradeWatch. Our TradeWatch Best Return stocks are showing an average return of 9.8% since the start of the year even after Friday's debacle, so you really should consider subscribing to this service.

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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”. 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.