Weekly Newsletter 03/27/09
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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  

Our trend model indicated a trend reversal from down to up for both the NASDAQ Composite and Russell 2000 this week.. The NASDAQ signal changed on Wednesday and the Russell 2000 on Thursday. In addition to our signal changing, Friday's NASDAQ chart shows that the index has broken above the bearish descending triangle that has persisted for some time. The next point of resistance is the central peak of the double bottom at 1665. A gain of 8% from this point is needed before a double bottom breakout becomes possible.

NASDAQ Composite

The NASDAQ has risen an impressive 22% since its low on March 3 but this does not signal that the bear market is over. We are reminded that bear market rallies of 30% or more are common as this chart of the 1929-1932 bear market shows:

Bear Market Rallies
(Click for enlargement)

Despite the considerable gains since March 9, we are yet to see a significant number of breakouts and as our statistics below show, those stocks that have broken out have not delivered a stellar performance. We would love to be wrong, but this looks like a bear trap to us.

 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
The present rally could fail so wait until the NASDAQ breaks out of the double bottom before committing significant funds to the market.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 7776.18 6.84% -11.4% Down
NASDAQ 1545.2 6.03% -2.02% Up
S&P 500 815.94 6.17% -9.67% Down
Russell 2000 429 7.22% -14.11% Up
Wilshire 5000 8275.54 6.08% -8.93% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
7.22 %
NASDAQ Composite
0.98 %
NASDAQ Composite
-29.23 %
NASDAQ Composite
-2.02 %
 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 11 9.62 6.94% -4.57%
Last Week 3 9.62 8.7% 1.21%
13 Weeks 113 10.46 16.62%
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 COGO Comtech Group Inc 101
Top Technical SNDA Shanda Interactive Ent Ltd 45
Top Fundamental HMSY Hms Holdings Corp 41
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
Top Technical SNDA Shanda Interactive Ent Ltd 41
Top Tech. & Fund. MNRO Monro Muffler Brake Inc 54
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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