Breakoutwatch Weekly Summary 09/03/16

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.

Contents
New Features this Week Strategy Suggestions Breakouts Summary Breakouts Detail	Top Cup and Handle Chart Pattern Stocks Breakouts Index Major Indexes Performance	Best Performing Index Best Performing Industry Most Improved Industry

Weekly Commentary
DJI Trend Indicator Gives Downturn Warning Our trend indicator for the DJI turned down on Thursday. A weakness in any major indicator can be a warning sign that others may follow, although for now, the trend indicator for both the S&P 500 and NASDAQ Composite remain at 'up'. We know that most breakouts come from the NASDAQ so we follow that index more closely than the others. The NASDAQ chart is showing that a potential head and shoulders top pattern (HST) is forming, with a possible right shoulder being established in Friday's trading. This is not yet a sign for alarm, as the head and shoulders pattern would need to be completed before a distinctive bearish pattern is confirmed. This would occur if the price crosses the dashed line shown in the chart below. That is, a fall to a closing price below 5225. This is worth watching in the coming days. If the HST pattern is completed, then opening new long positions should be discouraged. You can learn how we determine a Head and Shoulders Top pattern here.

New Features this Week
No new features this week.

Strategy Suggestions
Should any of your holdings complete a head and shoulders top pattern, our strategy suggestions are: We published an analysis of Head and Shoulders Top breakdowns in our newsletter of 7/29/06. We found that a breakdown occurred in 96.38% of cases. This indicates that the head and shoulders pattern is a very powerful predictor of a price decline to come. This is true whether the slope of the neckline is upwards, flat or downwards. Of these, the decline after breakdown exceeded 5% in 74.5% of breakdowns. Upward sloping necklines are much more common than downward sloping necklines and have a slightly higher potential return by about 1%. As with the 50 DMA breakdown watchlist, our suggestions are based on my analysis of the results quoted, a review of the literature and the experiences of a short sale hedge fund manager Short selling is risky because your potential loss is unlimited. When going long, the maximum amount you can lose is your initial investment, when shorting there is no limit to how high the stock can go from your entry level, so cover quickly when the stock moves against you. Review the H&S Top watchlist prior to the market open to select stocks you would consider shorting if an alert is issued. Set a target cover price before you go short, using either a fixed percentage or an expected support level, and take profits at that level. If you go short on an alert and the stock recovers above the support level by the close, consider covering your position immediately. If you go short on an alert and the stock closes below the support price but volume doesn't meet the 1.5 times adv requirement, don't cover but wait for the action on the following day. Cover when a support level is tested and found to hold. Don't bet against the market. If you hold a long position in a stock that has completed the right shoulder of an H&S pattern, then you should sell because 96% of these stocks will break down. Because of the high probability that a breakdown is about to occur, you may wish to open a short position immediately an H&S is identified before waiting for the breakdown. The position can then be added to when the breakdown occurs.Immediately after the breakdown, set a stop loss at the breakdown price to protect yourself against the 17.6% of breakdowns that recover the next day. Otherwise, a reasonable target profit for the trade is 70% of the target price.

Breakouts Summary by Watchlist for Week Beginning 08/29/16
List	Breakouts	Avg. Gain
CWH	11	3.26
SQZ	5	2.9
HTF		0
HSB		0
DB		0

Breakouts Detail for Week Beginning 08/29/16
Brkout Date	Symbol	Base	Squeeze	BrkoutOut Price	Brkout Day Close	RS Rank^*	Last Close	Current % off BOP	Gain at Intraday High
2016-08-30	AMID	CWH	n	12.50	13	92	14.28	14.24%	14.4%
2016-08-30	CLCD	SQZ	y	9.44	11	96	10.66	12.92%	16.53%
2016-09-02	AVHI	CWH	n	15.33	16	81	16.08	4.89%	5.28%
2016-08-29	LGIH	CWH	n	36.44	38	92	38.22	4.88%	7.66%
2016-08-30	USAC	CWH	n	16.25	16	85	16.86	3.75%	3.75%
2016-08-29	EVA	CWH	n	24.64	25	93	25.28	2.6%	3.94%
2016-09-01	STS	SQZ	y	17.23	17	98	17.62	2.26%	3.42%
2016-09-02	SQM	CWH	n	27.23	28	95	27.74	1.87%	1.87%
2016-09-02	CIB	CWH	n	40.16	41	87	40.9	1.84%	2.56%
2016-09-02	HNRG	CWH	n	6.75	7	80	6.87	1.78%	4%
2016-08-30	LMAT	SQZ	y	18.05	18	83	18.35	1.66%	4.43%
2016-08-30	INTL	CWH	n	36.41	37	85	36.84	1.18%	2.33%
2016-09-02	WK	CWH	n	17.93	18	84	18.1	0.95%	0.95%
2016-08-31	CRAI	SQZ	y	26.85	27	80	26.73	-0.45%	16.61%
2016-08-30	HBP	SQZ	y	6.36	6	97	6.24	-1.89%	5.19%
2016-08-29	AGM	CWH	n	40.74	41	87	39.88	-2.11%	1.64%
^*RS Rank on day before breakout.

12 Month Successful Breakout History

Top Rated Cup and Handle Stocks as of Friday September 02, 2016
Symbol	BO Price	BO Vol.	Company	Industry	RS Rank	Last Close
SKY	12.29	45,186	Skyline Corporation	Manufactured Housing	99	11.99
SMMF	20.47	49,941	Summit Financial Group - Inc.	Regional - Mid-Atlantic Banks	94	19.78
ENBL	14.93	364,054	Enable Midstream Partners - LP	Oil & Gas Pipelines	93	14.25
SMLP	25.02	214,120	Summit Midstream Partners - LP	Oil & Gas Pipelines	93	24.91
DAKT	9.99	620,024	Daktronics - Inc.	Computer Based Systems	92	9.74
CEQP	22.14	388,228	Crestwood Equity Partners LP	Oil & Gas Pipelines	92	20.95
OFG	11.25	564,990	OFG Bancorp	Money Center Banks	92	10.90
ARLP	21.20	505,524	Alliance Resource Partners - L.P.	Industrial Metals & Minerals	92	20.77
These stocks meet our suggested screening factors for our Cup and Handle Chart Pattern watchlist. See Revised Rules for Trading Cup and Handle Breakouts

Major Index Summary
Index	Value	Change Week	Change YTD	Trend¹
Dow	18492	0.53%	6.12%	Down
NASDAQ	5249.9	0.59%	4.84%	Up
S&P 500	2179.98	0.5%	6.66%	Up
¹The Market Trend is derived from our proprietary market model. The market model is described on the sitehere. ²The site also shows industry rankings based on fundamentals, combined technical and fundamentals, and on price alone. The site also shows daily industry movements.

Best Performing Index
1 Week	13 Weeks	26 Weeks	Year-to-Date
NASDAQ Composite	NASDAQ Composite 6.22 %	NASDAQ Composite 11.3 %	S&P 500 6.66 %

Best Performing Industry (by average technical score over each period)
1 Week	3 Weeks	13 Weeks	26 Weeks
Manufactured Housing	Manufactured Housing	Silver	Silver

Most Improved Industry (by change in technical rank²)
Telecom Services - Foreign 65	Railroads 79	Manufactured Housing 215	Manufactured Housing 216
Charts of each industry rank and performance over 12 months are available on the site

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