Weekly Newsletter 05/08/09
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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 rose for the eighth successive week on substantially higher volume but the hanging doji candlestick for the week shows that buyers and sellers were pretty much in equilibrium with buyers just winning. The heavy selling came on Thursday as traders took profits ahead of the uncertainty of the bank stress test results. But by Friday, optimism was restored and the markets recovered all of Thursday's losses. The financial sector led the way with a 7.4% gain in the S&P Financial sector on the news that none of the 19 banks tested were insolvent which pushed aside any concern that 10 of the 19 needed an additional $75 billion in new equity capital to survive if the economy worsens.

NASDAQ Composite

We have a curmudgeonly view of the validity of the stress test results but perception is more important than reality in the markets so we will happily put those views aside and instead rejoice in the rising confidence.

The number of breakouts jumped from 20 to 32 this week returning 6.9% at Friday's close.

Chart of the Week

Most charts on our cup-with-handle watchlist have lengthy cups corresponding to the steep market decline beginning last November and bottoming in March. An exception is ICU Medical (ICUI) which set a new 52 week high on April 30 and has since formed a well shaped handle. ICUI scores a 6.2 out of 7 on our technical scale and 9.3 out of 11 on our fundamental scale. First quarter profits were more than double those of a year ago.

ICU Medical

 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
Next week we will announce a new service in partnership with a major provider of investment research. Watch this space!!!
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 8574.65 4.41% -2.3% Down
NASDAQ 1739 1.15% 10.27% Up
S&P 500 929.23 5.89% 2.88% Down
Russell 2000 511.82 5.1% 2.48% Up
Wilshire 5000 9509.08 5.67% 4.64% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
S&P 500
5.89 %
NASDAQ Composite
9.25 %
NASDAQ Composite
5.56 %
NASDAQ Composite
10.27 %
 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 32 12.54 12.43% 6.88%
Last Week 20 11.46 15.73% 8.85%
13 Weeks 157 13.62 21.75%
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 GERN Geron Corporation 108
Top Technical SMSI Smith Micro Software Inc 102
Top Fundamental MVL Marvel Entertainment Inc 42
Top Tech. & Fund. GMKT GMarket Inc 59
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 CFSG CHINA FIRE & SEC GRP 82
Top Fundamental CFSG CHINA FIRE & SEC GRP 82
Top Tech. & Fund. CFSG CHINA FIRE & SEC GRP 82
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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