Weekly Newsletter 12/12/08
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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  

The rally remains intact after the market has weathered news of mounting unemployment, falling retail sales and the uncertain future of the domestic auto industry. There is good news in that wholesale and gas prices are falling so inflation is not  a concern, but the prospects of a deflationary spiral are becoming more real. During times of deflation what you could buy today will be cheaper tomorrow so consumption and investment falls. Add to that the need to save because of job insecurity and we have the makings of a more severe contraction than we are experiencing already. How much of this is already priced into the markets is difficult to know but we continue to believe the possible returns outweigh the downside risks.

Our market trend model is still showing a downward trend for the five indexes we follow, but by looking at the internals of the model we can see that we are getting closer to a trend reversal.

Technically, we are now in a new bull market because the S&P 500 has risen more than 20% from its lows. The markets want to move higher because there is a lot of cash on the sidelines with almost nowhere else to go to get a positive return. Hence, the bias is for the markets to rise slowly but high levels of uncertainty remain which accounts for the low volume levels we are seeing at the moment. The candlestick pattern for this weeks NASDAQ trading shows this uncertainty precisely with an almost perfectly balanced doji.

Nasdaq Composite

Understandably, there have been few breakout attempts lately and even fewer successes due to the low trading volume.

 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 top tip this week
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 8629.68 -0.07% -34.94% Down
NASDAQ 1540.72 2.08% -41.91% Down
S&P 500 879.73 0.42% -40.09% Down
Russell 2000 468.43 1.59% -38.85% Down
Wilshire 5000 8800.17 0.72% -40.62% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
2.08 %
Dow Jones
-24.45 %
Dow Jones
-29.88 %
Dow Jones
-34.94 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Long Distance Carriers Long Distance Carriers Long Distance Carriers Long Distance Carriers
 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 1 9.92 2.27% 0.66%
Last Week 5 11.77 8.58% -0.65%
13 Weeks 145 11.85 14.42%
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 TSYS Telecommunications System 107
Top Technical COGT Cogent Systems 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
Company Name
Expected Gain1
There are no top second chances this week
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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