BreakoutWatch.com Weekly Review for 08/01/2015

You are receiving this email because you are or were a BreakoutWatch.com subscriber, or have subscribed to our weekly newsletter. This newsletter summarizes the breakout events of the week and provides additional guidance that does not fit into our daily format. It is published each weekend.

Market Summary

Weekly Breakout Report

Top Breakout Choices

Top 2nd Chances

New Features

Tip of the Week

Prior editions of this newsletter with our valuable Tips of the Week are available here.

Weekly Commentary

Stocks rallied this week after shrugging off an 8.5% plunge in China's Shanghai Composite. The markets gained further momentum on Wednesday as the FOMC declined to raise interest rates yet again. With no meeting now until mid-September, I see no reason that the pattern of rising stock prices constrained by the upper and lower trend lines shown on the chart should not continue, barring an unforeseeable external shock. That gives a target for the NASDAQ over the next week or so of 5270 or thereabouts.
NASDAQ Composite Chart

Weekly Breakout Report

The number of breakouts pulled back from 37 last week to 30 this week. Of the 30, only 3 were under water at Friday's close and the average weekly gain was a healthy 3%. Cup and Handle stocks dominated the breakouts with 20 compared to 10 from a Volatility Squeeze. CwH breakouts gave a weekly gain of 4.2%.

Brkout Date	Symbol	Base	Squeeze	BrkoutOut Price	Brkout Day Close	RS Rank^*	Last Close	Current % off BOP	Gain at Intraday High
Breakouts for Week Beginning 07/27/15
07/30/15	WWE	CwH	N	17.61	19.36	91	19.57	11.13	11.3
07/28/15	MSTR	CwH	N	187.39	202.01	80	203.735	8.72	9.3
07/30/15	HPY	CwH	N	57.10	57.26	80	62.26	9.04	9.23
07/30/15	BLDR	CwH	N	13.95	14.75	98	15.065	7.99	8.03
07/29/15	WOOF	CwH	N	57.07	60.10	72	61.55	7.85	8.01
07/29/15	VNTV	CwH	N	40.99	42.77	71	44.02	7.39	7.45
07/30/15	MWW	CwH	N	6.60	6.89	87	7.045	6.74	6.82
07/29/15	PGTI	SQZ	Y	15.16	15.59	91	16.05	5.87	6
07/27/15	AGN	CwH	N	322.44	326.98	91	331.64	2.85	5.29
07/30/15	EXLS	CwH	N	37.23	37.52	87	38.71	3.98	4.14
07/28/15	JJSF	CwH	Y	114.16	115.90	81	118.34	3.66	3.73
07/28/15	FGL	CwH	Y	25.20	25.73	83	26.03	3.29	3.29
07/27/15	STZ	SQZ	Y	116.45	117.34	80	120.05	3.09	3.19
07/29/15	NOC	CwH	N	170.35	173.44	76	173.11	1.62	2.97
07/31/15	GMK	SQZ	Y	51.02	52.41	80	52.41	2.72	2.84
07/31/15	MOH	CwH	N	73.43	75.43	93	75.43	2.72	2.81
07/29/15	BJRI	SQZ	Y	50.30	51.08	94	51.59	2.56	2.58
07/31/15	AMGN	CwH	N	172.74	176.83	82	176.83	2.37	2.46
07/30/15	HFC	CwH	N	47.22	48.15	83	48.26	2.20	2.29
07/30/15	RGR	CwH	N	58.88	60.15	84	60.085	2.05	2.17
07/29/15	EFX	SQZ	Y	100.19	102.21	89	102.11	1.92	2.02
07/29/15	PLT	SQZ	Y	57.19	57.59	75	58.05	1.50	1.63
07/31/15	WWWW	CwH	N	24.57	24.86	87	24.86	1.18	1.34
07/29/15	GNE	SQZ	Y	10.77	10.9	91	10.34	-3.99	1.21
07/29/15	MKC	SQZ	Y	81.14	81.4	78	81.96	1.01	1.08
07/29/15	OMAB	CwH	N	44.48	44.91	81	44.4	-0.18	0.97
07/30/15	HTLF	SQZ	Y	37.55	37.75	93	37.69	0.37	0.53
07/29/15	HCSG	CwH	N	35.10	35.23	84	34.91	-0.54	0.37
07/27/15	FFKT	SQZ	Y	28.37	28.41	90	25.5	-10.12	0.14
07/31/15	QLTY	CwH	N	15.92	15.92	96	15.92	0.00	0
Weekly Average (30 breakouts)								2.97	3.77
^*RS Rank on day before breakout.

New Features this Week

Additional Value that we added this week

No new features this week.

This Week's Top Tip

Tips for getting the most out of our site

Mea Culpa: Do Not Day Trade Based on Close Up Prediction

Last week I introduced a new Cup and Handle watchlist filter to select stocks that are predicted to close up at the next session. This filter is based on a model that backtested to predict stocks that will close up with 68.5% accuracy. I have now identified a flaw in the model which reduces its reliability.

The aim of the model was to identify stocks that could be bought at the next day's open and be rewarded with a gain on the day 68.5% of the time. Theoretically, over time this would return a substantial gain because there would be two winners for every loser.

The flaw in the model was in failing to account for the situation where the stock gaps up at the next day's open and then closes below the open price, even though it may close higher than the previous day's close as correctly predicted.

Consequently, I cannot recommend trading based on the predictions of this filter at this time.

Market Summary

Overview of market direction and industry rotation

Index

Value

Change Week

Change YTD

Trend

Dow

17689.9

0.69%

-0.75%

Down

NASDAQ

5128.28

0.78%

8.28%

S&P 500

2103.84

1.16%

2.18%

1 Week	13 Weeks	26 Weeks	Year-to-Date
Best Performing Index
S&P 500 1.16 %	NASDAQ Composite 2.46 %	NASDAQ Composite 10.64 %	NASDAQ Composite 8.28 %
Best Performing Industry (by average technical score over each period)
1 Week	3 Weeks	13 Weeks	26 Weeks
Tobacco Products - Other	Tobacco Products - Other	Textile Industrial	Drugs Wholesale
Most Improved Industry (by change in technical rank²)
Auto Parts Wholesale + 116	Auto Parts Wholesale + 112	Tobacco Products - Other + 167	Tobacco Products - Other + 186
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. The site also shows daily industry movements.

Top Breakout Choices

Stocks on our Cup-and-Handle list with best expected gain if they breakout