The NASDAQ Composite recovered this week with volume trending higher as summer comes to an end. Volume exceeded the 50 day average on Wednesday and Friday and this should soon lead to a reversal of our trend indicators that currently remain negative.



The uptick in volume allowed several strong breakouts and there was an overall average gain of 6% by the week's end. As usual, cup-with-handle breakouts were the strongest, but a couple of High Tight Flag breakouts scored particularly well also.

B'out Date	Symbol	Base	B'Out Price	Last Close	Current % off BOP	*Gain at Intraday High
9/4/2013	ASTX	CwH	6.87	8.73	27.07%	27.07%
9/4/2013	SBLK	CwH	8.63	10.16	17.73%	17.73%
9/4/2013	AMBI	HTF	14.21	15.15	6.62%	11.68%
9/3/2013	VRTU	DB	26.42	29	9.77%	9.77%
9/4/2013	GDP	HTF	23.16	24.93	7.64%	7.64%
9/4/2013	MZOR	CwH	15.56	15.44	−0.77%	3.79%
9/6/2013	CTRN	CwH	17	17.31	1.82%	1.82%
9/6/2013	GNTX	DB	24.49	24.93	1.80%	1.80%
9/3/2013	SFD	CwH	33.65	33.92	0.80%	0.92%
9/3/2013	NGVC	CwH	38.68	36.04	−6.83%	0.72%
9/4/2013	ORA	CwH	25.82	25.98	0.62%	0.62%

New Support Forum

Now that I am more settled after the return from Australia, I found the time to install a new support forum. You will recall that I had to remove the old one due to a spammer getting access. To increase security on the new one,  you will have to sign in with your breakoutwatch username and password before you will be able to post a question. Regrettably, I was not able to copy over the old forum but will add the more important posts in the coming week.

Using RS Rank 92 as a Buy Signal

At the suggestion of a subscriber, I have been analyzing a strategy that buys when a stock first gains an RS Rank of 92, has a positive trend, determined from our Trend Reversal Signals (TRS),  and a slope that is also trending up. The strategy sells when the TRS next turns down.

The analysis was performed over the last year,  which has been generally bullish. The analysis looked at every stock that attained an RS of 92 but had a lower RS on the previous day. The strategy buys the stock at the open of the following day provided the TRS is positive and the slope is trending up. The stock is sold at the open on the day immediately following the TRS turning negative, regardless of the slope trend. If a stock was sold but again qualified later for the buy conditions , then it was  re-bought and sold. 

I used the default values for the TRS parameters but varied the slope "window" from 5 days to 89 days using the Fibonacci series, 5, 8, 13, 21, 34, 55, 89.

Slope Period	# Cases	Winners	Losers	Avg. Profit
5	2826	1169	1657	1.15%
8	2823	1106	1717	0.46%
13	2768	1112	1112	0.26%
21	2880	1206	1674	1.29%
34	3162	1355	1807	1.93%
55	3372	1346	2026	0.81%
89	3756	1514	2242	1.03%

Conclusion

While the strategy makes small profits these are likely to be negated by brokers' fees and other causes of slippage.

The RS Rank level of 92 has been found to give the best possibility of higher returns from Cup-with-Handle breakouts, but there's no reason that that level should be the most important level when determining a buy signal. other than for  cwh stocks.