Weekly Newsletter 06/19/09
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You are receiving this email because you are or were a BreakoutWatch.com subscriber, or have subscribed to our weekly newsletter. This newsletter summarizes the breakout events of the week and provides additional guidance that does not fit into our daily format. It is published each weekend.
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 week began badly with news from the Federal Reserve that the recession in manufacturing in the New York region was worsening instead of easing as anticipated. A downgrade of credit ratings on 18 banks by Standard and Poors also moved markets lower. The economic news improved somewhat by week's end as the IMF signaled it would revise its growth forecasts for the year modestly upwards. The week ended with a rally in technology stocks led by Apple Computer and Microsoft but it was insufficient to forestall a drop in the NASDAQ Composite and the other major indices for the week overall.

The fall in the NASDAQ early in the week led us to believe that a test of resistance at the 1660 level was likely. While that cannot be ruled out, we think it is less likely. However, an indication that the mood of the market is turning more cautionary is the complete lack of successful breakouts this week. In part, this is due to a decline in daily volume levels, but we have also seen attempts fail on price indicating that traders are in control and taking quick profits while they can.

 New Features this Week Additional Value that we added this week

We've added a facility to the Zacks Strong Buy login page that allows you to set a stop-loss percentage. This is used in the ZSB history report to provide a more realistic report of the performance you would have achieved by following our ZSB strategy.

The default stop-loss percentage value is 5%, but you can set this to any value between 0 and 20%. The value is used to determine the first day that the intraday low falls below the stop loss percentage you specify. The report then assumes a sell at the stop loss price on that date.

The format of the report has been modified to show when a stop loss has been applied. The report also shows any sell alert dates, the sell at open after alert price and the latest closing price if the position was not stopped out or a sell alert was not issued.

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

The Zacks Strong Buy Strategy has been shown to provide exceptional returns (over 100% compound per year). However, it is important to follow the strategy exactly to achieve the results expected. The strategy rules are:

Buy Rules:

  1. For subscribers able to act on email alerts: buy as soon as you receive the alert
  2. For others: buy at next session's open. (Note: After an alert, these stocks move up quickly and buying at the open can mean paying a significant premium over the alert price with a consequent loss of profits. The premium paid is shown in the simulation results).

Sell Rules

  1. Immediately after opening a position initiate a stop loss order at 4-5% below the alert price.
  2. If you bought in response to an attempted breakout alert but the breakout was not confirmed, sell at the next open - we send you an email sell alert if the breakout is not confirmed.
  3. Sell at next open if it is no longer ranked #1 on Zacks rank. We send you a sell alert when this condition is met.

If you haven't yet done so, read our white paper and try our backtest tool to prove the validity of the strategy.

You must be a Zacks subscriber to access the Zacks Strong Buy watchlist and associated reports and alerts.. You can get a 30-day free trial from Zacks Investment Research by clicking the Zacks logo:


 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 8539.73 -2.95% -2.7% Down
NASDAQ 1827.47 -1.69% 15.88% Up
S&P 500 921.23 -2.64% 1.99% Down
Russell 2000 512.72 -2.68% 2.66% Up
Wilshire 5000 9428.51 -2.81% 3.76% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
-1.69 %
Russell 2000
25.4 %
NASDAQ Composite
16.82 %
NASDAQ Composite
15.88 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Auto Dealerships Auto Parts Stores Auto Parts Stores Auto Parts Stores
 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 0 16.31 0% 0%
Last Week 12 16.62 6.43% -3.09%
13 Weeks 208 16.69 22.77%
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 DL China Distance Education Holdings Limited 123
Top Technical EC Engelhard Corp 49
Top Fundamental ABV Ambev (comp De Bebidas Adr) 56
Top Tech. & Fund. ABV Ambev (comp De Bebidas Adr) 56
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
No breakouts this week, so no second chances.
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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