Weekly Newsletter 03/13/09
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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 major indexes made their biggest gains for the week since last October led by bank stocks. The rally followed statements by major bank leaders that they were profitable, except for taxes and special items, in the first two months of the year. How big the special items are was not disclosed so the newly bullish mood may fade when the realities of first quarter earnings are revealed in April. In the short term, it seems the rally has some legs but whether or not it can be sustained will depend on the Administration delivering a convincing bank rescue plan which credibly explains how the public/private partnership to deal with toxic assets will function and how the assets will be valued.

The major indexes are in a double bottom (DB) formation formed from the November and March lows and the rally that was extinguished at the start of the year. The double bottoms formed by the DJI, S&P 500 and Russell 2000 (not shown here) are too far vertically separated to meet the strict definition that we use (maximum 3% separation) but the NASDAQ Composite fits the requirement comfortably as the chart shows.

NASDAQ Composite

The index would need to gain another 17% before confirming a breakout from the DB which would put it back to break-even for the year. That seems quite a challenge with the national and world economies continuing to deteriorate but if talk of a recovery of the domestic economy starting around October continues, then a move upwards 6-months ahead of that is not unreasonable as traders and investors start to place bets that a recovery is on the way.

Newsletter Subscriptions

We regret that due to a drop-off in subscribers as the market has fallen, we are forced to change our free newsletter policy. From now on, the newsletter will only be free for the first 3 months of a newsletter subscription and thereafter will be available for the nominal fee of $4.95 a month. Regular subscribers (Bronze and above) will continue to receive the newsletter as part of their regular subscription, of course.

 New Features this Week Additional Value that we added this week

We've received only positive responses to the new watchlist format so we are introducing alerts based on the new filtering options on Monday. These options allow you greater control over the alerts you will receive so you need focus only on those that meet the criteria you have selected. While the volume of alerts has been slow in the last months, we can expect that to pickup if the rally continues.

We will continue to keep the 'legacy' watchlists available for a few weeks while you all become accustomed to the new ones.

This Week's Top Tip Tips for getting the most out of our site
You haven't already done so, check out the backtest options available on the new watchlists. The backtest has proven very powerful for selecting filters for the cup-with-handle list and that power is now extended to other 'long' position lists as well.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 7223.98 9.01% -17.69% Down
NASDAQ 1431.5 10.64% -9.23% Down
S&P 500 756.55 10.71% -16.24% Down
Russell 2000 393.09 11.98% -21.3% Down
Wilshire 5000 7675.94 10.68% -15.53% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
11.98 %
NASDAQ Composite
-7.09 %
NASDAQ Composite
-36.69 %
NASDAQ Composite
-9.23 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Auto Parts Stores Auto Parts Stores Education & Training Services Cigarettes
 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 8 9.69 7.24% 6.11%
Last Week 3 9.31 16.59% 4.36%
13 Weeks 117 9.85 16.04%
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 CYCL Centennial Communications Corp 75
Top Technical MYL Mylan Laboratories Inc 65
Top Fundamental SXL Sunoco Logistics Ptnrs Lp 37
Top Tech. & Fund. SXL Sunoco Logistics Ptnrs Lp 37
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 DNBK Danvers Bancorp, Inc. 61
Top Technical HMSY Hms Holdings Corp 40
Top Fundamental HMSY Hms Holdings Corp 40
Top Tech. & Fund. HMSY Hms Holdings Corp 40
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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