Weekly Newsletter 01/21/06
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Market Summary Weekly Breakout Report Top Breakout Choices Top 2nd Chances New Features Tip of the Week
Prior editions of this newsletter with our valuable Tips of the Week are available here.
 Weekly Commentary  

Market Summary

Entering into this week, investors were anxious that the new year rally could not be maintained unless 4th quarter earnings at least met analysts' expectations. Their anxiety was raised on Wednesday when Yahoo and Intel failed to meet expectations but allayed on Thursday when eBay and AMD reported solid earnings. Gloom spread across the markets on Friday, though, as GE and Citigroup disappointed and crude oil prices rose sharply in response to the Iran situation and Al Qaeda threats. There was no respite during the day FRiday as the markets fell all day to close at or near their lows. The result for the week was heavy losses for the major indexes as the DJI lost 2.67% to close lower for the year, the NASDAQ lost 2.99% leaving it just 1.92% higher for the year after reaching almost 5% on January 11 and the S&P 500 gave up 2.03% leaving it just 1.06% higher for the year.

Turning to the situation on the NASDAQ we see a bearish picture emerge. The index has now crashed through the rising wedge pattern that it rode above for so long. It has also broken through the most recent support level at 2332 and fallen to just below its 50 day moving average.



To understand where it might go next, our models give a conflicting picture. On the one hand, our market model is still signaling 'enter' as there have been only two distribution days in the last fifteen sessions (and only one this year) whereas our sell model issued a sell signal after Friday's close. I am going to put more reliance on the market model because I understand the models' inner workings.

The number of successful breakouts from our watchlists dropped slightly to 40 this week and the average gain by weeks end was a losing -0.2% although still very comfortably outperforming the major indexes.

Our new TradeWatch lists are performing very well. Our TradeWatch Best Return list has averaged a 9.8% return since the start of the year.

Machinery Construction/Mining again topped our list of top ranked industries based on our Technical Criteria while Auto & Truck Replacement Parts was the most improved industry in our rankings.

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 New Features this Week Additional Value that we added this week

Sell Alert Enhancements

You now have the option of entering a stop loss and/or a target price into our sell alert service. Each day after the market closes we will compare the closing price to your stop loss and/or target price for the stock and if either is met we will send an email alert. If they are not met, or you didn't specify either or both, we will check our Sell Model's and send an alert if that signals sell.

You can check the status of your sell alerts and edit them from the TradeWatch 'Sell Alerts' menu choice by clicking the 'Edit Alert' icon.

 

This Week's Top Tip Tips for getting the most out of our site

TradeWatch Revised Documentation

Coinciding with the release of the enhanced Sell Alert functionality, we have fully revised and brought up to date the documentation on TradeWatch. Our TradeWatch Best Return stocks are showing an average return of 9.8% since the start of the year even after Friday's debacle, so you really should consider subscribing to this service.

Investment Advisors Using our Service

If you would like to be listed here, please contact us. As a service to those who support us, there is no additional charge to be listed here.

TradeRight Securities, located in a suburb of Chicago, is a full services investment management company and broker/dealer. They have been a subscriber, and user, of BreakoutWatch.com for some time now. They practice CANTATA and use Breakoutwatch.com as a “research analyst”. You can learn more about TradeRight Securities at: www.traderightsecurities.com. If you’re interested in speaking to a representative, simply call them toll-free at 1-800-308-3938 or e-mail gdragel@traderightsecurities.com.

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 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Market1
Signal
Dow 10667.4 -2.67% -0.47% enter
NASDAQ 2247.7 -2.99% 1.92% enter
S&P 500 1261.49 -2.03% 1.06% enter
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
S&P 500
-2.03 %
S&P 500
-3.06 %
NASDAQ Composite
0.93 %
NASDAQ Composite
1.92 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Machinery-Const/Mining Machinery-Const/Mining Machinery-Const/Mining Oil & Gas-Cdn Integrated
 Most Improved Industry (by change in technical rank2)
Auto & Truck-Repl Prts
+ 43
Energy-Other Sources
+ 73
Electr-Scientific Instruments
+ 127
Mining-Gold/Silver/Gems
+ 169
Charts of each industry rank and performance over 12 months are available on the site

1The Market Signal is derived from our proprietary market model. The market model is described on the site.
2The site also shows industry rankings based on fundamentals, combined technical and fundamentals, and on price alone (similar to IBD). The site also shows daily industry movements.
 Weekly Breakout Report How confirmed breakouts performed this week
# of Breakouts
Period Average1
Max. Gain During Period2
Gain at Period Close3
This Week 40 34.69 3.57% -0.21%
Last Week 44 34.08 6.67% 1.88%
13 Weeks 504 36.46 14.64%
6.92%
Sector
Industry
Breakout Count for Week
Banks
Banks-Super Regional
4
Electronics
Electr-Semicndtr Equip
3
Healthcare
Healthcare-Biomed/Genetic
3
Finance
Finance-Brokers
2
Special
Special-Market/Tracking Funds
2
Building
Building-Residentl/Comml
1
Building
Building-Heavy Constr
1
Chemical
Chemical-Basic
1
Computer
Computer-Storage Devices
1
Computer
Computer-Integrated Sys
1
Electronics
Electr-Semicndtr Mfg
1
Electronics
Electr-Measuring Instruments
1
Healthcare
Healthcare-Instruments
1
Healthcare
Healthcare-Drugs/Ethical
1
Insurance
Insurance-Prop/Casualty/TItl
1
Internet
Internet-ISP/Content
1
Leisure
Leisure-Gaming
1
Leisure
Leisure-Services
1
Leisure
Leisure-Movies & Related
1
Machinery
Machinery-Industrial
1
Media
Media-Cable/Satellite TV
1
Metal Prds
Metal Prds-Distributors
1
Mining
Mining-Misc Ores
1
Oil & Gas
Oil & Gas-U S Explr/Prod
1
Oil & Gas
Oil & Gas-Drilling
1
Personal
Personal-Funeral Services
1
Personal
Personal -Cosmetics
1
Retail
Retail-Home Furnishings
1
Telecomm
Telecomm-Equipment
1
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
Category
Symbol
Company Name
Expected Gain1
Best Overall APLX APPLIX INC 100
Top Technical RCCC Rural Cellular Corp. 35
Top Fundamental TOMO TOM Online Inc. 36
Top Tech. & Fund. TOMO TOM Online Inc. 36
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
Category
Symbol
Company Name
Expected Gain1
Best Overall LANV LANVISION SYS INC 94
Top Technical LANV LANVISION SYS INC 94
Top Fundamental PARL PARLUX FRAGRANCES INC 0
Top Tech. & Fund. DXPE DXP ENTERPRISES INC NEW 79
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. Because the model variance is +/- 38% the expectation can be negative.

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