Breakoutwatch Weekly Summary 01/28/17

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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
The NASDAQ led the three major indexes to new highs with a gain of 1.9%. Volumes were at or above the 50 day average which produced a big uptick in confirmed breakouts to 25 with several showing breakout day gains of over 10%. Volatility Squeeze (SQZ) breakouts were predominant, outnumbering cup and handle pattern breakouts by 19 to 6. The reason for the large number of SQZ breakouts can be found by observing that the NASDAQ was trading in a narrow range in the previous week. A narrow trading range implies low volatility so it was natural that here should be many SQZ breakouts this week as the index responded to generallly good earnings from the tech. sector.

New Features this Week
No new features this week.

Strategy Suggestions
Buy at Open Strategy for those Who Cannot Monitor the Market in Real time Determine the amount of your portfolio that you will trade on cup and handle pattern stocks. Determine the number of positions you wish to hold and allocate an equal amount of your portfolio to each position. I suggest 2 positions with a 50% allocation(1). This is your portfolio management plan. Each day, after the market closes, create a list of cup and handle pattern stocks that satisfy these conditions: The stock must have closed above its breakout price Daily volume must be at least 1.25 times the 50 day average volume RS Rank must be at least 94 (this selects stocks with price gains in the top 95 percentile over the last 12 months. It is a proxy for momentum) Industry Rank must be in the top 50 percentile (i.e. have a rank less than 111 in our industry ranking scheme) 50 day average daily volume >= 100,000 Positive Quarterly Earnings score >= 6/10 (CEF2) (see CANTATA Scoring) Quarterly Earnings Growth Acceleration score >= 2/10 (CEF3) (see CANTATA Scoring) Last Close <= $12 (lower priced stocks have a higher probability of better returns) You can create this list of stocks on our Cup and Handle Chart Pattern watchlist using the filter settings shown at right. Now: Check the market trends published each day on our Monitor > Market Analysis page or in our daily email If market trend is positive, place a market order to buy at the next open with a stop limit 5% above the breakout price (BoP). Only buy if you have a position open in your portfolio management plan. Monitor the closing price each day and set a trailing stop at 10% below the highest close since breakout. This will require resetting the trailing stop each time the stock makes a new high. Sell if trailing stop is met intra-day (you can do this with a sell stop order if you are unable to monitor the market). Other than setting the daily stop loss as described, you do not need to fret over when to sell the stock because sooner or later you will be stopped out of your position by the trailing stop. Hopefully, your capital has increased but if not, do not despair, some drawdown is inevitable as not every position you open will be a winner. In fact, your win % may be as low as 6 out of 10 on average, but your stop loss strategy will minimize your losses. After a sale, wait for the next time the above conditions are met. During 2016, this buy at open strategy could have earned 32%, excluding brokerage fees and slippage. This can be verified using our cup and handle pattern backtest tool.

Breakouts Summary by Watchlist for Week Beginning 01/23/17
List	Breakouts	Avg. Gain
CWH	6	3.92
SQZ	19	4.44
HTF		0
HSB		0
DB		0

Breakouts Detail for Week Beginning 01/23/17
Brkout Date	Symbol	Base	Squeeze	BrkoutOut Price	Brkout Day Close	RS Rank^*	Last Close	Current % off BOP	Gain at Intraday High
2017-01-23	IIVI	SQZ	y	30.86	31	89	36.25	17.47%	21.68%
2017-01-23	CCLP	CWH	n	11.39	12	89	12.67	11.24%	18.88%
2017-01-23	NEFF	SQZ	y	14.46	15	97	16	10.65%	13.42%
2017-01-23	MRCY	SQZ	y	31.15	31	88	34.21	9.82%	13.16%
2017-01-25	UPLD	CWH	n	10.98	11	92	11.95	8.83%	10.02%
2017-01-24	AVHI	SQZ	y	16.94	18	81	18	6.26%	12.93%
2017-01-24	SMTC	SQZ	y	32.11	33	89	33.7	4.95%	5.57%
2017-01-25	TPC	SQZ	y	29.46	32	96	30.8	4.55%	12.02%
2017-01-25	STRL	SQZ	y	8.84	9	91	9.19	3.96%	7.24%
2017-01-25	MRVL	SQZ	y	14.52	15	83	15.09	3.93%	6.4%
2017-01-27	MX	CWH	n	8.35	9	82	8.65	3.59%	4.19%
2017-01-27	NEFF	SQZ	y	15.51	16	97	16	3.16%	5.74%
2017-01-27	ARLP	SQZ	y	23.61	24	84	24.35	3.13%	3.77%
2017-01-25	ESNT	SQZ	y	33.31	34	89	34.31	3%	4.41%
2017-01-24	FCX	CWH	n	15.94	17	98	16.37	2.7%	7.03%
2017-01-25	POWI	SQZ	y	70.61	72	82	72.5	2.68%	2.75%
2017-01-25	PH	SQZ	y	145.49	150	82	149.27	2.6%	3.2%
2017-01-25	MDR	SQZ	y	7.89	8	97	8.06	2.15%	5.58%
2017-01-25	TEX	SQZ	y	32.49	33	92	33.11	1.91%	4.25%
2017-01-26	BLBD	SQZ	y	16.69	17	80	16.95	1.56%	2.16%
2017-01-25	EXP	SQZ	y	104.31	109	91	105.63	1.27%	6.07%
2017-01-27	WAL	SQZ	y	49.90	51	86	50.53	1.26%	1.54%
2017-01-25	AXTI	CWH	n	6.20	7	96	6.2	0%	7.74%
2017-01-25	FCBC	SQZ	y	30.15	31	88	30.14	-0.03%	2.35%
2017-01-25	RES	CWH	n	22.28	22	91	21.65	-2.83%	4.85%
^*RS Rank on day before breakout.

Top Rated Cup and Handle Stocks as of Friday January 27, 2017
Symbol	BO Price	BO Vol.	Company	Industry	RS Rank	Last Close
CC	25.63	5,548,918	Chemours Company (The)	Specialty Chemicals	99	25.39
SAIA	50.80	342,140	Saia - Inc.	Trucking	96	49.75
OCLR	10.35	8,821,546	Oclaro - Inc.	Semiconductor Equipment & Materials	96	9.96
SLM	11.87	5,868,050	SLM Corporation	Credit Services	95	11.79
DCO	31.11	145,182	Ducommun Incorporated	Aerospace/Defense Products & Services	95	29.28
KOP	43.35	185,656	Koppers Holdings Inc.	Specialty Chemicals	95	41.80
ARCB	32.50	500,304	ArcBest Corporation	Trucking	94	31.90
HBHC	46.70	1,257,411	Hancock Holding Company	Regional - Southeast Banks	94	45.70
GTLS	39.36	384,404	Chart Industries - Inc.	Metal Fabrication	94	38.55
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	20093.8	1.34%	1.68%	Up
NASDAQ	5660.78	1.9%	5.16%	Up
S&P 500	2294.69	1.03%	2.5%	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	Dow Jones 9.07 %	NASDAQ Composite 9.66 %	NASDAQ Composite 5.16 %

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

Most Improved Industry (by change in technical rank²)
Broadcasting - Radio 51	Recreational Vehicles 67	Long Distance Carriers 195	Basic Materials Wholesale 211
Charts of each industry rank and performance over 12 months are available on the site

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