Site Introduction

We have a unique approach and feature-rich set of supporting tools. This uniqueness and richness can make it difficult for new subscribers to get the most out of our site during a short trial. Please take the time to read this document to understand our approach and then read the additional documents we provide in our Learning Center.

Core Services - breakout or breakdown candidates

At the heart of our services are our watchlists of stocks meeting certain chart pattern criteria. These stocks are canididates for either a break out, in which case they may be suitable for taking a long position in, or break down, in which case they could be shorted. For each stock on the watchlists we provide:

  • pivot point - the price at which the stock is either about to breakout or breakdown
  • technical and fundamental data
  • industry ranings and rank within industry
  • an analysis of the stock using a methodology we call CANTATA (Current earnings + Annual earnings + New highs + Technical Analysis + Timing Assistance)
  • stock chart

Additional Services - breakout or breakdown Alerts

Once a stock has appeared on our watchlist we follow its price movement in real time. If it reaches its pivot price we:

  • send an email alert
  • add it to our list of 'Alert Issued Today'
  • place it on our 'Alert Monitor' where the price and volume is displayed in real time through out the day

Additional Services - Special situations, Research Tools and Reports

We are always trying to provide better ways for our subscribers to improve their investment performance. Examples are:

  • 'Tradewatch' - special stock selections for investors who cannot monitor the markets in real time
  • Backtesting tools which simulate how breakouts have performed depending on technical and fundamental characteristics on breakout
  • Our 'Sell Assistant' helps you decide when to sell and will alert you when the sell criteria are reached.

How We Optimize the Search for our Watchlist Stocks

The traditional approach has been to 'eyeball' possibly hundreds of chart patterns for those that provide a valid entry point or 'pivot'. We turn that approach on its head by using computer algorithms to find charts that give a valid entry point and then rating the resulting stocks by technical and fundamental criteria. We also provide an estimate of the expected return that can be obtained after a breakout from our cup-with-handle watchlist based on an 18-month history of breakouts.

How We Are Different from “Stock Picking” Services

We provide a unique and timely set of tools to help you select potential breakouts that fit your particular trading style and risk tolerance. We do not tell you what you should buy or sell, nor do we perform due diligence on possible candidates for you. While this is what is typically done with a stock picking service, this requires that you have the same personal preferences and risk tolerance as does the service. This also takes the decision making process out of your hands, something we believe is critical to an investor’s long term success in the market.

How we Organize our Information

We organize our information in a 'life-cycle' style. That is, that there are four stages in each investment decision:

  1. Mining for investment candidates - searching for stocks that you will consider for detailed evaluation
  2. Evaluation - detailed analysis of candidate stocks against your personal investment criteria. Due diligence in other words and refinement of the watchlist.
  3. Take action - purchase a stock when a valid entry point occurs
  4. Monitor - follow progress of breakouts and changing market conditions

    Mining for Candidates

    Each day, we scan all common stocks and ETF's on the NYSE, AMEX and NASDAQ exchanges and provide you with a list of stocks setting up in cup with handle, flat base, double-bottom, head and shoulder bottom and top patterns meeting a minimum set of technical criteria. A stock with as little as 2 days in a cup-with-handle pattern will make it to our watchlist so that you have the opportunity to jump start your due diligence as the stock finishes off its base. While the list itself is not preselected based on fundamental criteria, filtering and sorting tools within the watchlist allow you to narrow the list based on your preferred fundamental, technical and/or industry criteria. Within the site, we also offer tools to review the fundamental details for each stock. The selection process for inclusion on BreakoutWatchSM is described more fully in our Watchlist Methodology documents for each pattern. To review these, go to the Learning Center > Help Reference menu options on the site.

    In addition to our primary mining sources consisting of the three watchlists, we also offer:
    • Basewatch - stocks that are foming their bases but are not yet quite ready for inclusion on the three main watchlists
    • Database Search - find stocks in our database that meet that meet specific technical or fundamental criteria whether they are on a watchlist or not.
    • CwH Chart Selector - find stocks that are in a cup-with-handle base using your own CwH criteria (this can be a slow process)
    • ShortsaleWatch - stocks that may become suitable for shorting in the near future. This watchlist is based on ideas presented in William O'Neil's book 'How to Make Money Selling Stocks Short'.

    Evaluation Tools
  5. We have a comprehensive set of evaluation tools including our proprietary CANTATA Evaluator, specialized Stock Charts, Industry Components listings, Industry Charts and Industry Analysis tools. More information on each of these tools is available from the home page.
    Our CANTATA Evaluator (CESM) measures each stock against a preferred set of characteristics for a CANTATA candidate. The CE tool allows you to measure any potential candidate against the CANTATA yardstick using a “preponderance of evidence” approach . This is described more fully in our help documents. To review these, go to the home page and click the “CANTATA Evaluator (CESM)” button, then click on the “Info” buttons that accompany the tools.
    We deliberately do not rank stocks against each other as does the IBD’s EPS and SMR metrics, as these values do not always accurately reflect whether a stock has all or some of the desired fundamental attributes of a CANTATA candidate. Our CE Detail provides a transparent view of not only the stock’s underlying fundamental details but also the CE points attributed to each fundamental characteristic.

    Our Industry Analysis tools provide an innovative and succinct method of viewing industry performance. We place each stock into one of our 190 Industries and then both Score and Rank each industry. Our approach is significantly different than that used by the IBD, which uses the average price of each industry group as the basis of their ranking system. Our proprietary methodology instead views the overall technical health of each stock within an industry, and then utilizes these to assign an Industry Score. Plotted over time, this more easily demonstrates the technical action of the Industry vs. the Market. We use these Industry Scores as the basis of our Ranking system. To review information on our Industry Tools, go to the home page and click the “Industry” button, then click on the “Info” buttons that accompany the tools.

    Action Tools

    We offer a unique tool previously unavailable to the CANTATA investor--alerts which are automatically emailed directly to you when a stock on our daily watchlist attempts a breakout. Because each user will choose to pursue different stocks, we offer the option to receive alerts only on those stocks that meet your personal preferences or on all stocks attempting a breakout during market hours. This is achieved through setting filters for each watchlist. There is more information on how to set filters on the help document associated with each watchlist.
    Monitoring Tools
    The Breakout Report is updated daily with the progress of stocks that broke out in the last thirteen weeks. This report allows you to find stocks that have broken out but are within a 5% range of their breakout price and could be considered for purchase. The Breakout Report also shows the progress of each stock since breakout.
    The Market Analysis shows clearly the current state of the markets as measured by the DJI, Nasdaq Composite and S&P 500 indexes. Our 'equivolume' charts show the strength and direction of the indexes in a unique graphical format that clearly shows movement, volume and Accumulation and Distribution days on a single chart. Since 75% of all stock movements are explained by the overall market direction, our Market Analysis page is an indispensable tool in making investment decisions.

Using Our Site

While each investor will have their own unique way of using the tools at our site, we have provided a general set of guidelines for you in our “How to Use Our Site” tutorial.

Subscriber Support

Perhaps our greatest strength is our willingness to support our subscribers as they learn to use our tools or have questions about the CANTATA investing approach. We prefer to receive questions relating to the use of the site through the BreakoutWatch Forum which is accessed under the 'Help Desk' menu choice. This is so that other subscribers, who may have a similar question, can find the answer there. If you have a technical problem relating to your browser or PC/Mac setup, then please use the 'Technical Assistance' link under 'Help Desk' and we will try to help you directly.