BreakoutWatch.com Weekly Review

The market continues to trend higher but at a slower pace. Our equivolume chart of the NASDAQ Composite shows that the index set a new intraday high for the year on Thursday and met resistance at that level on Friday. The chart shows how well the index has performed since the brief consolidation at the beginning of September with five accumulation days and only two days when profit taking produced a small loss.

Friday's accumulation day is slightly suspect because it was also a 'quadruple witching' day. The spike in volume is caused by fund managers closing and opening options and futures contracts but the small gain shows that the underlying trend is still bullish.

Equivolume Chart

On our equivolume chart, the width of the day's 'candle' and the number below the candle represent the ratio of the volume to the 50 day average volume. Note that the trend in September has been to beat the average daily volume. The average volume is increasing and each day the volume is beating the average so volume is actually rising exponentially, which demonstrates that more and more money is flowing into stocks.

This increase in volume and upward price trend has produced an increase in the number of breakouts and an improvement in their average gains for the week. In our top tip below we show that the High Tight Flag pattern is producing some excellent results. Here is an example of a high flyer breakout from a HTF pattern.

DTG

No new features this week.

High Tight Flag Breakouts Outperform the Rest

The market recovery this year has created many cup-with handle patterns as stocks recover from the bear market but conditions have been just as favorable for the High Tight Flag (HTF) pattern. Once quite rare, the V-shaped market recovery since March has produced a plethora of breakouts from this pattern as so many stocks have gained 100% or more in a short time frame. In fact, the number of successful breakouts from this pattern is second only to the Cup-with-Handle pattern.

Interestingly, far from suffering exhaustion after their rapid rise, HTF breakouts sustain their momentum and have outperformed the other patterns, as the following table shows.

Breakout Performance over Last 90 Days
Base	Count	Average Gain to Intraday High
High Tight Flag	64	28.1%
Cup-with-Handle	79	21.8%
Head and Shoulders Bottom	3	25.1%
Flat Base	8	9.0%

Although the steep market ascent is now slowing, the HTF breakouts continue to perform well. Of the fourteen breakouts this week that gained at least 10% after breakout, eleven of those were from an HTF base and just three from a CwH base.


B'out Date	Symbol	Base	B'Out Price	RS Rank	Gain at Intraday High
9/14/2009	PERY	HTF	13.43	88	26.58
9/14/2009	IRE	HTF	16.05	99	25.73
9/16/2009	USG	CwH	15.91	84	24.95
9/16/2009	AIB	HTF	8.44	93	23.46
9/15/2009	REXX	CwH	7.2	82	19.17
9/14/2009	MAC	HTF	30.22	90	17.5
9/16/2009	GCI	HTF	9.22	93	16.38
9/15/2009	MSO	HTF	7.62	94	15.98
9/14/2009	SLG	HTF	38.5	87	15.87
9/15/2009	BYD	CwH	11.18	85	14.22
9/15/2009	GET	HTF	21.97	91	14.16
9/15/2009	LENB	HTF	12.49	88	11.05
9/15/2009	SOA	HTF	12.45	98	10.6
9/15/2009	VCI	HTF	16.25	99	10.15

Best Performing Index

Best Performing Industry (by average technical score over each period)

Most Improved Industry (by change in technical rank²)

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. The site also shows daily industry movements.

Max. Gain During Period²

Gain at Period Close³