Breakoutwatch Weekly Summary 08/29/20

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Weekly Commentary
NASDAQ Gains 3.5%; Are we in a Bubble? The rise of the NASDAQ seems inexorable and understandably investors are nervous as comparisons are made to the dot com bubble of 2000. That bubble was driven by speculation in the internet-related companies of the day, just as the NASDAQ is today being driven by today's equivalent: the FAANG stocks (Facebook,Apple, Amazon,Netflix and Google) plus Microsoft. The bubble was driven by the easy availability of venture capital and the abandonment of traditional valuation metrics such as P/E ratios. When the bubble burst, the NASDAQ Composite dropped 78%. Today, the Federal Reserve is playing the role of the venture capitalists of the 2000's. This week, the Fed announced that it was abandoning it's 2% inflation target. It had already announced that interest rates would stay close to zero until 2022 and has injected $3 trillion into financial markets since February. With interest rates so low, companies can borrow cheaply to fund investment, and the corollary is that investors have no where else to go for income than the stock market. Australian writer Colin Twiggs in his newsletter this week proposes one way to think about the potential bubble is to compare corporate profits to market capitalization. Under this analysis when corporate profits are low compared to valuations, then stock prices are overvalued. His chart below, with my annotations, indicates we are getting close the levels of the 2000 bubble.

Chart of the Week
Safehold Inc. (SAFE) is in a Volatility Squeeze and appears ready to breakout to the upside. The chart shows it has plenty of potential to gain up to 20% back to the pivot point if its previous cup and handle pattern.

New Features this Week
No new features this week

Strategy Suggestions
Our latest strategy suggestions are here. I was asked a question on the Support Forum about a statement in our "How to Use Our Site" page about how to recognize a flawed base. The answer is here.

Breakouts Summary by Watchlist for Week Beginning 08/24/20
List	Breakouts	Avg. Gain
CWH	1	0.4
SQZ	5	5.13
HTF	1	-2.79
HSB		0
DB	1	2.56

Breakouts Detail for Week Beginning 08/24/20
Brkout Date	Symbol	Base	Squeeze	Brkout Price	Brkout Day Close	RS Rank^*	Last Close	Current % off BOP	Gain at Intraday High
2020-08-25	CCH	SQZ	y	13.91	15	84	16.34	17.47%	22.21%
2020-08-26	CCH	SQZ	y	15.01	15.8	87	16.34	8.86%	13.26%
2020-08-27	IMAB	SQZ	y	30.20	31.24	96	31	2.65%	12.52%
2020-08-26	NFLX	DB	n	510.82	547.53	85	523.89	2.56%	7.47%
2020-08-25	AMRC	CWH	n	32.55	34.2	93	32.68	0.4%	7.1%
2020-08-24	BLDP	SQZ	y	16.23	16.49	96	15.99	-1.48%	9.67%
2020-08-25	SWTX	SQZ	y	44.90	44.96	89	44.07	-1.85%	7.86%
2020-08-25	DQ	HTF	n	128.76	133.37	97	125.17	-2.79%	6.42%
^*RS Rank on day before breakout.

Top Rated Cup and Handle Stocks as of Friday August 28, 2020
Symbol	BO Price	BO Vol.	Company	Industry	RS Rank	Last Close
FUV	8.23	2,490,706	Arcimoto - Inc.	Recreational Vehicles	98	6.50
FSK	17.25	1,128,050	FS KKR Capital Corp.	Asset Management	98	16.07
SURF	7.20	1,192,450	Surface Oncology - Inc.	Biotechnology	95	6.19
OESX	6.21	618,735	Orion Energy Systems - Inc.	Electrical Equipment & Parts	93	6.17
CBB	15.14	687,933	Cinci	Telecom Services	92	15.05
EQT	17.97	7,133,532	EQT Corporation	Oil & Gas E&P	92	16.02
LCA	16.86	5,228,536	Landcadia Holdings II - Inc.	Shell Companies	90	15.29
CNX	12.27	5,891,062	CNX Resources Corporation	Oil & Gas E&P	89	11.30
UNIT	10.50	2,095,503	Uniti Group Inc.	REIT - Industrial	82	9.85
LPL	6.59	531,453	LG Display Co - Ltd AMERIC	Consumer Electronics	81	6.35
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	28653.9	2.59%	0.4%	Up
NASDAQ	11695.6	3.39%	30.35%	Up
S&P 500	3508.01	3.26%	8.58%	Up
¹The Market Trend is derived from our proprietary market model. The market model is described on the site here. 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 23.24	NASDAQ Composite 36.51	NASDAQ Composite 30.35

Best Performing Industry
1 Week	3 Weeks	13 Weeks	26 Weeks
Silver	Silver	Medical Distribution

Most Improved Industry (by change in technical rank²)
Lodging 21	Agricultural Inputs 39	Furnishings, Fixtures & Appliances 60	Copper 139
Charts of each industry rank and performance over 12 months are available on the site

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