Weekly Newsletter 08/08/08
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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

As our Market Summary table (below) shows, the major indexes had a strong week led by the NASDAQ Composite with a 4.5% gain for the week. The weekly chart shows the strength of the upward move compared to other weeks over the last year and is similar to those made in January, March and April. The move this week looks more convincing though for several of reasons: 

  1. Volume was above average whereas on the similar move in early April that was not the case.

  2. The volume trend is upwards - surprising as volume is usually lower during the summer weeks.

  3. Commodity prices, particularly oil, have dropped over 20% 

  4. The dollar is at last gaining traction. A strong dollar will lower the cost of imported fuel and food and reduce inflation allowing the Fed to keep interest rates low as an economic stimulus.

The index is now above its 50 day moving average although that did not stop it collapsing in June as Fannie and Freddie made headlines. Until the index sustains itself above the 200 dma, then we are reluctant to call the March low as the market bottom.

NASDAQ Composite

As we reported last week, the Russell 2000 is providing the most successful and rewarding breakouts and that index is the only one to have moved above its 200 dma. It still needs to clear the hurdle of its downward trend line before the recovery is secure.

Russell 2000

Another sign of a strengthening market and improving investor confidence that short to medium term gains can be realized is the number of stocks breaking out. The breakout count rose to 52 this week and of these, only three failed to stay above their breakout price by Friday's close. It has been rare lately to see really strong gains on breakout, but five stocks closed the week over 10% higher

B'out Date Symbol Base B'Out Price Current % off BOP *Gain at Intraday High Expected Gain %
08/07/08 PRXL CwH 29.66 20.73% 20.74% 51
08/05/08 IIVI CwH 39.5 17.01% 18.25% 50
08/07/08 HWK CwH 19.07 15.31% 17.99% 50
08/06/08 ENSG CwH 13.09 14.59% 18.41% 60
08/08/08 ROCK CwH 17 11.18% 14.65% 77

 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

No Tip this Week

 

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 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Market1
Signal
Dow 11734.3 3.6% -11.54% enter
NASDAQ 2414.1 4.46% -8.98% exit
S&P 500 1296.31 2.86% -11.72% enter
Russell 2000 734.29 2.53% -4.14% N/A
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
4.46 %		 Russell 2000
1.98 %		 Russell 2000
5.06 %		 Russell 2000
-4.14 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Long Distance Carriers Long Distance Carriers REIT - Healthcare Facilities REIT - Healthcare Facilities
 Most Improved Industry (by change in technical rank2)
Aluminum
+ 54		 Aluminum
+ 99		 Long Distance Carriers
+ 213		 Long Distance Carriers
+ 210
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 52 22.23 6.17% 3.83%
Last Week 37 21.38 9.58% 4.38%
13 Weeks 321 24.69 10.71%
 -1.13%
Sector
Industry
Breakout Count for Week
DIVERSIFIED SERVICES
Research Services
3
ELECTRONICS
Scientific & Technical Instruments
3
HEALTH SERVICES
Medical Instruments & Supplies
3
COMPUTER SOFTWARE & SERVICES
Business Software & Services
2
FINANCIAL SERVICES
Closed-End Fund - Equity
2
HEALTH SERVICES
Medical Appliances & Equipment
2
HEALTH SERVICES
Specialized Health Services
2
HEALTH SERVICES
Long-Term Care Facilities
2
REAL ESTATE
REIT - Residential
2
AEROSPACE/DEFENSE
Aerospace/Defense Products & Services
1
BANKING
Regional - Northeast Banks
1
BANKING
Regional - Pacific Banks
1
CHEMICALS
Specialty Chemicals
1
COMPUTER HARDWARE
Networking & Communication Devices
1
COMPUTER HARDWARE
Diversified Computer Systems
1
COMPUTER SOFTWARE & SERVICES
Technical & System Software
1
COMPUTER SOFTWARE & SERVICES
Information Technology
1
CONSUMER NON-DURABLES
Textile - Apparel Footwear & Accessories
1
DIVERSIFIED SERVICES
Management Services
1
DIVERSIFIED SERVICES
Personal Services
1
DRUGS
Drug Delivery
1
ELECTRONICS
Semiconductor - Specialized
1
ELECTRONICS
Semiconductor - Integrated Circuits
1
HEALTH SERVICES
Health Care Plans
1
INTERNET
Internet Software & Services
1
INTERNET
Internet Information Providers
1
LEISURE
Restaurants
1
LEISURE
Specialty Eateries
1
MANUFACTURING
Small Tools & Accessories
1
MANUFACTURING
Industrial Electrical Equipment
1
MATERIALS & CONSTRUCTION
Waste Management
1
MEDIA
CATV Systems
1
METALS & MINING
Steel & Iron
1
RETAIL
Auto Parts Stores
1
RETAIL
Discount, Variety Stores
1
RETAIL
Apparel Stores
1
SPECIALTY RETAIL
Jewelry Stores
1
TELECOMMUNICATIONS
Communication Equipment
1
TRANSPORTATION
Trucking
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 DAIO Data I/O Corp 114
Top Technical RNT Aaron Rents Inc 42
Top Fundamental UNP Union Pacific Corp 44
Top Tech. & Fund. APEI American Public Education, Inc. 47
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 NTCT Netscout Systems Inc 90
Top Technical SXE Stanley Inc 51
Top Fundamental NTES Netease.com Inc 58
Top Tech. & Fund. NTES Netease.com Inc 58
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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