Weekly Newsletter 12/25/04
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Market Summary Weekly Breakout Report Top Breakout Choices Top 2nd Chances New Features Tip of the Week
 Weekly Commentary  

We finished last week with the possibility that the NASDAQ could suffer a distribution day on Monday which would signal the end of the recent rally. It didn't happen. The NAS was down, but on lower volume, so Monday did not qualify as a distribution day. The lower volume was most probably a result of the beginning of a shortened holiday week, but in the grand scheme, that didn't matter. From our perspective, the importance was that our market model did not signal an exit. The markets recovered on Tuesday and continued their gains to close the week higher.

The current NASDAQ chart now shows possibilities for moving higher, or a reversal. Our equivolume chart (combining price and volume on a single chart) shows the NAS has formed a head and left-shoulder and we must wait to see if the current close is but a stepping stone to a new high or a right shoulder from which a decline occurs. If the index should turn down from here, then that would be a bearish signal. On the other hand, if the index passes the intraday high of 2171.27 set on December 15, then we may conclude that the rally still has legs.

This was a shortened week so the number of breakouts was again lower. The gain for the week was significantly higher than last week and again significantly beat the market averages. For example, the average breakout, if held to week's end, made 3.04% compared to the NASDAQ's 1.19%.

Several individual stocks broke out to significant gains. Perhaps most interesting from a chart perspective was RECN which gapped up at the open on Thursday to close at a high of 8.95% above the pivot. This stock had shown considerable accumulation while in the handle in the two days prior to the breakout and could have been bought from our cup-with-handle watchlist by an astute chart watcher for considerable gains prior to the breakout. This is an example of where one can 'cheat' and buy the stock prior to the breakout because the volume is sufficiently strong.

The sectors providing the most breakouts this week were Business Services tied with Telecomm with three confirmed breakouts each.

I would like to take this opportunity to wish all our subscribers and newsletter readers the very best wishes for a safe and happy Christmas holiday season.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Market1
Dow 10827.1 1.66% 4.01% enter
NASDAQ 2160.62 1.19% 7.67% enter
S&P 500 1210.13 1.33% 9.17% enter
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
1.13 %
Dow Jones
2.69 %
Dow Jones
3.35 %
S&P 500
9.17 %
 Best Performing Industry
1 Week 3 Weeks 13 Weeks 26 Weeks
Healthcare-HMO Healthcare-HMO Oil & Gas-Drilling Oil & Gas-U S Integrated
 Most Improved Industry (by change in rank)
Building-Painting Prds
+ 44
+ 56
Computer-Optical Recog
+ 149
Computer-Optical Recog
+ 140

1The Market Signal is derived from our proprietary market model. The market model is described on the site.
 Weekly Breakout Report How confirmed breakouts performed this week
# of Breakouts
Period Average1
Max. Gain During Period2
Gain at Period Close3
This Week 17 39.08 4.88% 3.04%
Last Week 28 41.69 7.32% 0.59%
13 Weeks 509 N/A 17.91%
Breakout Count for Week
Business Services
Business Svcs-Misc
Business Services
Business Svcs-Sec/Safety
Computer-Integrated Sys
Electr-Parts Distrib
Electr-Semicndtr Equip
Finance-Misc Services
Real Estate/ REIT
Real Estate Management
Telecomm-Services Fgn
1The average number of breakouts in each week over the previous 13 weeks.
2This represents the return if each stock were bought at its breakout price and sold at its intraday high.
3This represents the return if each stock were bought at its breakout price and sold at the most recent close.
 Top Breakout Choices Stocks on our Cup-and-Handle list with best expected gain if they breakout
Company Name
Expected Gain1
Best Overall HAUP Hauppauge Digital, Inc. 117
Top Technical CVTX CV Therapeutics, Inc. 54
Top Fundamental CYTC Cytyc Corporation 42
Top Tech. & Fund. JUPM Jupitermedia Corporation 63
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 INTV InterVoice Inc. 112
Top Technical GRMN Garmin Ltd. 56
Top Fundamental GRMN Garmin Ltd. 56
Top Tech. & Fund. GRMN Garmin Ltd. 56
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
There were no new features added this week.
This Week's Top Tip Tips for getting the most out of our site

Due to the holiday season, there is no Top Tip this weekend. Next week we will show how to use breakoutwatch.com to identify breakout candidates in industries that are making the biggest positive moves.

Please review our newsletter archive and Learning Center Tutorials for previous articles in this series.

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