Weekly Newsletter 10/31/04
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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 Overview of market direction
Index Value Change Week Change YTD Market1 Signal Commentary
Dow 10027.5 2.76% -3.67% enter The markets halted their recent slide this week and posted two days of significant gains on Tuesday and Wednesday. The NASDAQ Composite, which is the most significant index for CANTATA investors, broke through its 200 day moving average, an important resistance level, on Wednesday and easily held above it through to the end of the week.

The number of confirmed breakouts for the week rose in line with the markets, with several breakouts showing gains of more than 10% within the week. The star performer was MIKN which broke out from a CwH base on Monday to gain 22% to its intraday high. This also has the highest expected gain of the week's breakouts at 101%

Although last week brought strong returns for our breakouts, we think there will continue to be uncertainty, and therefore increased risk in buying breakouts, until the election results are known.

NASDAQ 1974.99 3.13% -1.58% enter
S&P 500 1130.2 3.14% 1.96% enter
1The Market Signal is derived from our proprietary market model. The market model is described on the site.
 Weekly Breakout Report How confimed breakouts performed this week
# of Breakouts
Weekly Average1
Max. Gain During Week2
Gain at Week Close3
This Week 55 36.85 4.7% 2.62%
Last Week 37 35.23 6.17% 3.53%
1The average number of breakouts in each week over the previous 13 weeks.
2This represents the return if each stock was bought at its breakout price and sold at its intraday high.
3This represents the return if each stock was bought at its breakout price and sold at close at the end of the week.
 Top Breakout Choices Stocks on our Cup-and-Handle list with best expected gain if they breakout
Company Name
Expected Gain1
Best Overall INTV InterVoice Inc. 117
Top Technical QSND QSound Labs, Inc. 84
Top Fundamental EPIC Epicor Software Corporation 65
Top Tech. & Fund. EPIC Epicor Software Corporation 65
1This is the gain predicted by our Expected Gain model if the stock breaks out. Expected Gains for all cup-and-handle stocks are published on our site.
 Top Second Chances Stocks that broke out this week and are still in buyable range
Company Name
Expected Gain1
Best Overall BRCD Brocade Communications Systems, Inc. 114
Top Technical NCR NCR Corporation 38
Top Fundamental IPMT iPayment, Inc. 55
Top Tech. & Fund. IPMT iPayment, Inc. 55
1This is the gain predicted by our Expected Gain model after the stock has broken out which uses the volume on breakout as a predictive term.
 New Features this Week Additional Value that we added this week
We introduced a weekly newsletter. This is the first edition!
This Week's Top Tip Tips for getting the most out of our site

Using Expected Gain to improve returns

Our expected gain model was built after analysing the performance of all 1324 stocks that broke out from a cup-with-handle pattern over the period from April 1, 2003 to September 2, 2004. You can learn more about the model here.

The Expected Gain model uses the technical and fundamental characteristics of each stock at the time of breakout, combined with additional information to provide an estimate of the gain that can be expected after a stock has broken out. It provides a better basis than using technical or fundamental characteristics alone for selecting stocks for purchase. Expected Gain can be used in three ways to improve your overall returns.

  1. We recommend that you perform your due diligence on stocks on our watchlist in the evening or at least before the market opens. Expected Gain can be used to make the due diligence process more efficient as follows:
  • sort the CwH watchlist in order of Expected Gain by clicking the Expected Gain column heading in the watchlist
  • click the 'ChartBrowser' button to open the ChartBrowser window.
  • Using the 'Next' button, you can browse through the charts in descending order of Expected Gain.
  • Look for charts that have good cup-and-handle characteristics and then use the CE link to access deeper information about the stocks technical and fundamentals, including industry and company information
  • Put the stock on your personal watchlist and wait for a breakout alert before purchase
  • When you've browsed the watchlist once and created your own watchlist, you need only look at 'New' stocks next time to add them to your list.

2. If you haven't done your due diligence as described above, then use the Expected Gain to differentiate between stocks on which you have received alerts. The expected gain is included in the email alert so this can be used to decide which of several stocks on the alert list are worthy of consideration.

3. At the end of the day, look at the Breakout Report for stocks that broke out during the day and are still within the 5% buyable range. Use the Expected Gain to consider purchase of high expected gain stocks at the next open.

This tip has been posted to the Tutorials Forum (Under Learning Center) on our website. To comment or ask a question about this tip, please do so there. The Tutorial Forum is open to Guests.

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