Weekly Newsletter 04/10/09
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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 markets completed their fifth successive week of gains despite some profit taking on Monday and Tuesday. The impetus that put the rally back on track was an earnings surprise from Wells Fargo which earned a record $3 billion in the first quarter compared to $2 billion in the first quarter a year ago.

With many companies issuing low guidance for the first quarter, expectations are low so it is possible that we will see a number of earnings surprises that could continue to give the current rally life. The industry sector with the most potential to deliver surprises is finance which has been one of the most beaten down. Since March 9, XLF, the ETF which tracks the S&P financial sector has almost doubled in price from a low of $5.88 to close on Thursday at $10.63. A glance at the XLF chart would appear to indicate that the Financial sector has already made its run and is verging on reaching an overbought level, as indicated by the Stochastic RSI, or the Bollinger Bands.


In fact, I think this is a case where the technical indicators may be misleading us and there is still potential for more appreciation in this sector as earnings season progresses. To find potential breakouts from this sector, see this weeks tip.

The pullback at the start of the week created many two day handles with 170 stocks appearing on our cup-with-handle watchlist on Tuesday night. Thursday's rally led to 43 breakout attempts with 11 confirmed. Of these, 4 were from the finance group. Discover Financial Services (DFS) gained a healthy 17.5%. By Thursday's close breakouts had made an average gain of 6.5%, almost three times the gain of the S&P 500.

Another group that will benefit from the new emphasis on electronic medical records implementation will be the Healthcare Information Systems industry. QSII, the leader in that group also broke out on Thursday.

To allow our subscribers to catch breakouts from promising industry groups we have added a new tool that allows setting up personal watchlists by industry group. This is described below.

 New Features this Week Additional Value that we added this week

Export Industry Components from Industry Browser

This addition allows you to export symbol lists from the Industry Browser. The list can then be copied to the clipboard and used to make, for example Personal Watchlists.

A new icon, , has been added to the industry browser, Clicking the icon pops-up a small window containing the symbols in the industry sector or group chosen. The pop-up window contains instructions on how to copy the list to the clipboard. This example shows exporting the symbols in the Healthcare Information Systems industry group.

This Week's Top Tip Tips for getting the most out of our site

Creating a Personal Watchlist from Industry Components

If you want to be alerted when a stock from a particular industry sector or group breaks out, then you can do so as follows:

  1. Export the industry symbols from the Industry Browser as described above.
  2. Open the Evaluate > Personal Watchlists
  3. Paste from the clipboard into the blank area on the Personal Watchlist page.
  4. Enter a name for your new list and click Go.
  5. Go to Take Action - Alerts > Alert Preferences and choose one of:
    • Send alerts for stocks on my PWL's only
    • Send alerts for stocks meeting my watchlist filters AND on my PWL's
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 8083.38 0.82% -7.9% Down
NASDAQ 1652.54 1.89% 4.79% Up
S&P 500 856.56 1.67% -5.17% Down
Russell 2000 468.2 2.65% -6.26% Up
Wilshire 5000 8744.55 1.69% -3.77% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
4 %
NASDAQ Composite
2.2 %
NASDAQ Composite
0.45 %
NASDAQ Composite
4.79 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Auto Parts Stores Auto Parts Stores Cigarettes 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 16 9.62 7.81% 6.54%
Last Week 14 9.69 11.73% 7.97%
13 Weeks 110 11 18.48%
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 BJRI BJ's Restaurants Inc 73
Top Fundamental HMSY Hms Holdings Corp 48
Top Tech. & Fund. VNUS Vnus Medical Tech 62
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 MXIM Maxim Integrated Prods 69
Top Fundamental QSII Quality Systems Inc 62
Top Tech. & Fund. QSII Quality Systems Inc 62
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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