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Weekly Commentary
Market Summary
Number of Successful Breakout Alerts hits 88%
The last two days produced an unusually high proportion of successful breakouts with 88% breakouts confirmed after an intraday alert was issued. You will recall that we issue an alert when a watchlist stock reaches its breakout price on a projected daily volume of at least 1.5 times its 50 day average volume. It is considered a successful breakout if those criteria are still met at the close of trading for the day. Over the 6 1/2 years we have been operating, the average number of successful breakouts was 48.5% with a standard deviation of 27% so the percentage of successes seen over the last two days is rare indeed.
What significance can we draw from this and the general market condition?
Firstly, investors are afraid that they have missed the market bottom and are looking for stocks in which to invest.
Secondly, volumes are generally below the fifty day moving average indicating a great deal of caution that the rally may fail at any time.
Thirdly, when they do take the plunge, they choose stocks that are in bases that give the historically highest success rate.
Fourthly, momentum players are looking for potential breakouts and jump on them when they see the potential for intraday gains.
We have recently drawn attention to the double-bottom on the S&P 500. It met resistance at the pivot earlier in the week but did close just above the pivot on Friday. Volume was below average however, so we don't consider this to be a strong breakthrough of resistance.
Our commentary is foreshortened this week as we are leaving for Oahu to compete in a bike race on Sunday morning.
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Additional Value that we added this week
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This Week's Top Tip
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Overview of market direction and industry rotation
Index
Value
Change Week
Change YTD
Market1 Signal
Dow
12891.9
0.33%
-2.81%
enter
NASDAQ
2422.93
0.83%
-8.65%
exit
S&P 500
1397.84
0.54%
-4.8%
enter
Russell 2000
721.88
0.11%
-5.76%
N/A
Best Performing Index
1 Week
13 Weeks
26 Weeks
Year-to-Date
NASDAQ Composite 0.83 %
Dow Jones 5.61 %
Dow Jones -6.63 %
Dow Jones -2.81 %
Best
Performing Industry (by average technical score over each period)
1 Week
3 Weeks
13 Weeks
26 Weeks
REIT - Healthcare Facilities
REIT - Healthcare Facilities
Cleaning Products
Major Integrated Oil & Gas
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 (similar to IBD).
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
30
16.15
5.95%
3.22%
Last Week
31
14.23
6.59%
0.98%
13 Weeks
219
16.54
11.19%
3.64%
Sector
Industry
Breakout Count for Week
ENERGY
Oil & Gas Drilling & Exploration
3
HEALTH SERVICES
Hospitals
2
MANUFACTURING
Diversified Machinery
2
AEROSPACE/DEFENSE
Aerospace/Defense Products & Services
1
BANKING
Regional - Northeast Banks
1
CHEMICALS
Chemicals - Major Diversified
1
COMPUTER HARDWARE
Personal Computers
1
DIVERSIFIED SERVICES
Personal Services
1
ELECTRONICS
Diversified Electronics
1
ELECTRONICS
Printed Circuit Boards
1
ELECTRONICS
Semiconductor - Integrated Circuits
1
ENERGY
Oil & Gas Equipment & Services
1
ENERGY
Oil & Gas Pipelines
1
FINANCIAL SERVICES
Diversified Investments
1
FOOD & BEVERAGE
Food - Major Diversified
1
HEALTH SERVICES
Medical Instruments & Supplies
1
INTERNET
Internet Information Providers
1
MANUFACTURING
Industrial Electrical Equipment
1
MATERIALS & CONSTRUCTION
General Building Materials
1
REAL ESTATE
REIT - Office
1
REAL ESTATE
REIT - Diversified
1
SPECIALTY RETAIL
Specialty Retail, Other
1
TRANSPORTATION
Trucking
1
TRANSPORTATION
Air Delivery & Freight Services
1
TRANSPORTATION
Railroads
1
UTILITIES
Electric Utilities
1
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
Category
Symbol
Company Name
Expected Gain1
Best Overall
AIRV
AIRVANA, INC.
107
Top Technical
TUX
Tuxis Corporation
74
Top Fundamental
EGLE
Eagle Bulk Shipping Inc
56
Top Tech. & Fund.
ARD
Arena Resources Inc
66
1This is the gain predicted by our Expected Gain model if the stock
breaks out. Expected Gains for all cup-and-handle stocks are published on our
site.
Top Second Chances
Stocks that broke out this week and
are still in buyable range
Category
Symbol
Company Name
Expected Gain1
Best Overall
VTG
VANTAGE ENERGY SVCS
78
Top Technical
CPX
Complete Production Services Inc
59
Top Fundamental
EP
El Paso Corp
44
Top Tech. & Fund.
SOHU
Sohu.Com Inc
55
1This is the gain predicted by our Expected Gain model after the
stock has broken out which uses the volume on breakout as a predictive term.
Because the model variance is +/- 38% the expectation can be negative.