|Weekly Newsletter 09/22/07|
|Login Trial Guest|
|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.
|Prior editions of this newsletter with our valuable Tips of the Week are available here.|
Market conditions altered in favor of growth and technology stocks this week as interest rates fell and the cost of investment and money borrowed for acquisitions declined accordingly. This is good news for our subscribers as our methods favor growth and technology stocks.
The Federal Reserve sent a strong signal to the markets that they will "act as needed to foster price stability and sustainable economic growth" by cutting the prime interest rate by 0.5% when a cut of only 0.25% was expected. They reinforced that signal with another 0.5% cut in the discount rate. Market reaction was euphoric with the biggest 1 day gain in share prices in four years on Tuesday. The rally continued on Wednesday and profit taking did not occur until Thursday on much lighter volume. The markets closed the week with another gain on Friday for an overall gain of 2.81% by the DJI, 2.65% by the NASDAQ Composite and 2.80 % by the S&P 500.
The cut in interest rates also helps those with adjustable rate mortgages as they will now adjust upwards to a lesser extent and so foreclosures may be less severe than previously thought. On the negative side, the cut in interest rates risks stoking inflation as the dollar slides further making imports, especially oil, more expensive. Clearly, the FOMC weighed the risks of inflation against the risks of recession and chose inflation as the lesser of two evils.
Tuesday's gains on strong volume represented a breakout from a cup with handle pattern for the NASDAQ and another new pivot was set on Wednesday.
Friday's volume was above the recent average because Friday was a 'quadruple witching' day and also the day on which components of the S&P 500 were rebalanced.
The number of breakouts shot up to 29 this week with an average gain by the close of 4.4%, once again comfortably beating the major indexes. Those subscribers who jumped on ASTI when we issued an alert on Tuesday morning realized a 61% gain by Friday's close.
Each week we publish a list of what we call 'second chances' which are stocks that broke out during the week but are still within a buyable range. In response to an enquiry from a subscriber, we publish an analysis of the performance of these stocks in this week's 'Top Tip'.
Important note to Newsletter Subscribers who are not yet full subscribers: Our 14 day Trial is now completely free - no credit card needed to sign-up.
|New Features this Week||Additional Value that we added this week|
No new features this week.
|This Week's Top Tip||Tips for getting the most out of our site|
Performance of 'Second Chance' stocks
Each week in our newsletter we publish a list of four 'second chance' stocks. These are stocks that broke out during the week from our cup-with-handle watchlist, but are still within 'buyable range' . To qualify the stocks must be between -8% and +5% of their breakout price. The four stocks we select are those that are within this price range and have the best expected gain, best CE score, best technical score and best fundamental score. Following a request from a subscriber, we have analysed the potential results that would be obtained if you bought each of these stocks at the open on the next session after newletter publication and held them for 12 months at the most.
The methodology we used is similar to that which is used for our 'Performance Report' of all breakout stocks. We assumed that each stock was bought at the open of the next session. We then tracked each day's high and low price for the next 12 months.
The results were as follows.
As can be seen, the most successes and the least fails were for second chances that had the top expected gain value each week. This is as we would expect because our 'Expected Gain' calculation is designed to give the highest score to those stocks with characteristics that we have determined are most likely to give the best return within 12 months. These stocks also gave the best return overall. The second best scoring stocks were those that had the best CET score each week. This also doesn't surprise us because we have always thought that the technicals of a stock were a better indicator of its likely performance after breakout than the fundamentals.
Investment Advisors Using our Service
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 email@example.com.
Note to advisors: If you would like to be listed here, please contact us. As a service to those who subscribe to us, there is no additional charge to be listed here.
|Market Summary||Overview of market direction and industry rotation|
|Weekly Breakout Report||How confirmed breakouts performed this week|
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|
|Top Second Chances||Stocks that broke out this week and are still in buyable range|
If you received this newletter from a friend and you would like to receive it regularly please go to the BreakoutWatch.com site and enter as a Guest. You will then be able to register to receive the newsletter.
Copyright © 2007 NBIcharts, LLC dba BreakoutWatch.com. All rights reserved.
" BreakoutWatch," the BreakoutWatch.com "eye" logo, and the slogan "tomorrow's breakouts today" are service marks of NBIcharts LLC. All other marks are the property of their respective owners, and are used for descriptive purposes only.