Weekly Newsletter 04/24/09
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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 NASDAQ Composite was the only major index to continue its winning streak this week although the major indexes did close out the week with an accumulation day on Friday. The damage was done on Monday when the Bank of America increased its provision for bad loans causing concern that the financial sector was not as healthy as had been supposed following first quarter profits at JP Morgan, Goldman Sachs and Citibank. This coincided with the Index of leading Economic Indicators predicting further declines for the economy. Although the financial sector, and the rest of the markets, moved higher later in the week, it was not sufficient to overcome Monday's deficit.

The exception was the technology sector which scored three accumulation days in the week as several major technology companies reported better than expected earnings. Among these were major players Apple, Microsoft, AT&T and Amazon. ORACLE, which announced a takeover of Sun Microsystems on Monday, attempted to breakout on Friday but slipped back on profit taking before the close.

Looking ahead, apart from technology, the remainder of the markets seem to be moving more or less in lockstep with the financial sector. Treasury reported on Friday that  “Most U.S. banking organizations currently have capital levels well in excess of the amounts required to be well capitalized” so for the moment this sector has stabilized but we still wait for the results of the stress tests to be announced, which is due on May 4. The stress tests are designed to assess the ability of the banks to withstand further losses and if the IMF's assessment that the global losses will amount to $4.1 Trillion is correct, then there is certainly more stress to come. This means that while there is stability and increasing confidence at the moment, there could be downward pressure on the banks, and the rest of the market, in months to come.

The number of breakouts and the gains they make continued to improve this week There were twenty confirmed breakouts compared to twelve last week. They made average intraday gains of over 10% and closed the week with an average gain of 5.7%.

 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

Our Tradewatch strategy has languished somewhat over the last two years after proving very profitable in 2007. This was developed for my personal use as I choose not to rise at 3:30 am to follow the markets in real time. Hence I developed the Buy at Open and Buy on Breakout strategies which allow an order to be placed the night before the next day's trading. As the markets have recovered these strategies are starting to prove profitable again. Positions currently open on these strategies are:

Buy on Breakout Buy at Open
Symbol Buy Date % Gain to Date Symbol Buy Date % Gain to Date
ALGN 4/22/2009 17.44 CQP 4/23/2009 13.00
LL 4/22/2009 2.61 ALGN 4/23/2009 18.24
UTEK 4/22/2009 −4.58 KFRC 4/13/2009 18.69
SMSI 4/17/2009 6.95 OPTR 3/27/2009 9.65
TYH 4/2/2009 15.37 Avg. Gain 14.89
SFLY 3/31/2009 7.82
NTES 3/31/2009 17.13
SNDA 3/24/2009 26.73
TNDM 3/13/2009 17.95
MVSN 2/27/2009 19.39
Avg. Gain 12.68

Tradewatch can be added to any subscription level (except Bronze). You can learn more here.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 8076.29 -0.68% -7.98% Down
NASDAQ 1694.29 1.27% 7.44% Up
S&P 500 866.23 -0.39% -4.1% Down
Russell 2000 478.74 -0.13% -4.15% Up
Wilshire 5000 8863.06 -0.3% -2.47% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
1.27 %
NASDAQ Composite
14.69 %
NASDAQ Composite
9.17 %
NASDAQ Composite
7.44 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Auto Parts Stores Auto Parts Stores Auto Parts Stores 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 20 10.54 10.33% 5.65%
Last Week 12 9.38 11.74% 6.08%
13 Weeks 136 11 19.49%
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 TIBX Tibco Software Inc 118
Top Technical ININ Interactive Intelligence 91
Top Fundamental HMSY Hms Holdings Corp 51
Top Tech. & Fund. VNUS Vnus Medical Tech 67
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 ICFI Ifc International Inc 49
Top Fundamental GMKT GMarket Inc 55
Top Tech. & Fund. GMKT GMarket Inc 55
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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