The markets completed their fifth successive week of gains despite some profit taking on Monday and Tuesday. The impetus that put the rally back on track was an earnings surprise from Wells Fargo which earned a record $3 billion in the first quarter compared to $2 billion in the first quarter a year ago.

With many companies issuing low guidance for the first quarter, expectations are low so it is possible that we will see a number of earnings surprises that could continue to give the current rally life. The industry sector with the most potential to deliver surprises is finance which has been one of the most beaten down. Since March 9, XLF, the ETF which tracks the S&P financial sector has almost doubled in price from a low of $5.88 to close on Thursday at $10.63. A glance at the XLF chart would appear to indicate that the Financial sector has already made its run and is verging on reaching an overbought level, as indicated by the Stochastic RSI, or the Bollinger Bands.

In fact, I think this is a case where the technical indicators may be misleading us and there is still potential for more appreciation in this sector as earnings season progresses. To find potential breakouts from this sector, see this weeks tip.

The pullback at the start of the week created many two day handles with 170 stocks appearing on our cup-with-handle watchlist on Tuesday night. Thursday's rally led to 43 breakout attempts with 11 confirmed. Of these, 4 were from the finance group. Discover Financial Services (DFS) gained a healthy 17.5%. By Thursday's close breakouts had made an average gain of 6.5%, almost three times the gain of the S&P 500.

Another group that will benefit from the new emphasis on electronic medical records implementation will be the Healthcare Information Systems industry. QSII, the leader in that group also broke out on Thursday.

To allow our subscribers to catch breakouts from promising industry groups we have added a new tool that allows setting up personal watchlists by industry group. This is described below.

Export Industry Components from Industry Browser

This addition allows you to export symbol lists from the Industry Browser. The list can then be copied to the clipboard and used to make, for example Personal Watchlists.

A new icon, , has been added to the industry browser, Clicking the icon pops-up a small window containing the symbols in the industry sector or group chosen. The pop-up window contains instructions on how to copy the list to the clipboard. This example shows exporting the symbols in the Healthcare Information Systems industry group.

Creating a Personal Watchlist from Industry Components

If you want to be alerted when a stock from a particular industry sector or group breaks out, then you can do so as follows:

1. Export the industry symbols from the Industry Browser as described above.
2. Open the Evaluate > Personal Watchlists
3. Paste from the clipboard into the blank area on the Personal Watchlist page.
4. Enter a name for your new list and click Go.
5. Go to Take Action - Alerts > Alert Preferences and choose one of:
   • Send alerts for stocks on my PWL's only
     
   • Send alerts for stocks meeting my watchlist filters AND on my PWL's