Weekly Newsletter 09/19/08
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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  
Again we find ourselves on Friday afternoon with the potential for events over the weekend to overtake any intelligence we might glean from the behavior of the markets this week. While we have seen two very bullish days, there are good reasons to be cautious and to not take on too much additional risk:
  • While financial stocks and the broader markets appear to be recovering, much of the gains are a result of short covering, particularly in the financials. Bloomberg reports that short interest in financial stocks increased this year to 36 percent of all shares sold short in the S&P 500. The true underlying strength of the rally will not be clear until all the shorts are covered.
  • Until the details of the Treasury plan are released, and there is bi-partisan support for it, the market recovery is at risk. Republicans may balk at a $1 trillion bail out and Democrats will not support a plan that rewards Wall Street for its excesses but leaves Main Street struggling and with an added burden on taxpayers. With only a week before Congress adjourns, there is little time to agree on the biggest Government expenditure ever contemplated.
  • The bailout will almost certainly depress the dollar further adding to inflationary pressure on imports and may do little to improve the economic fundamentals, so while we may see a short term bounce, the underlying trend may still be downwards.
Nevertheless, this was an outstanding week for breakouts. We counted 93 confirmed breakouts, 67 of which came from our Cup-with-Handle watchlist. By Friday's close these breakouts had made an average gain of 4.7%, easily out stripping the gains in the indexes.
 New Features this Week Additional Value that we added this week
A further improvement was made to the new Personal Watchlist service to allow the breakout price to be displayed when viewing the intersection of PWL stocks and our watchlists.
This Week's Top Tip Tips for getting the most out of our site

This tip is no longer available.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD
Dow 11388.4 -0.29% -14.15%
NASDAQ 2273.9 0.56% -14.27%
S&P 500 1255.07 0.27% -14.53%
Russell 2000 753.4 4.6% -1.65%
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
4.6 %
Russell 2000
3.81 %
Russell 2000
7.43 %
Russell 2000
-1.65 %
 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)
+ 54
+ 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. 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 93 23.62 13.4% 4.69%
Last Week 26 20.46 12.04% 1.85%
13 Weeks 367 25.23 13.22%
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
Top Technical MCCC Mediacom Communication A 82
Top Fundamental LRN K12 INC 46
Top Tech. & Fund. QCOR QUESTCOR PHARMA 101
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 MPX Marine Products Corp 90
Top Technical SXI Standex Internat Corp 36
Top Fundamental ID L-1 Identity Solutions Inc 37
Top Tech. & Fund. ID L-1 Identity Solutions Inc 37
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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