Weekly Newsletter 07/17/09
Login   Trial   Guest
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  

Better than expected earnings by most companies reporting so far, the strength of profits at the major banks and upbeat forecasts from IBM and Intel gave the major indexes new impetus this week. The NASDAQ Composite broke through resistance on Wednesday and closed the week at a new high since March 9 and a gain for the week of 7.4%. The NASDAQ Composite is the only one of the indexes we follow to set a new high this week despite very solid gains for the other indexes - the Russell 2000 jumped almost 8% and our trend indicator for this index turned up again. Our trend indicators for the DJI and S&P 500 remain stubbornly negative. Historically, these indexes have not shown the volatility experienced in the last eighteen months and our models therefore continue to remain bearish. More important for breakout investors though is the trend of the NASDAQ and Russell 2000, as it is in these stocks that we can expect the most growth. Their upward trend indicates a positive outlook for successful breakouts.

This was confirmed with the number of breakouts which jumped from seven last week to twenty-six this week. Top performer was GROW which catapulted out of a double bottom base for a 20.5% gain.

 New Features this Week Additional Value that we added this week

Our Zacks Strong Buy report was amended to reflect the latest results as we continue to refine this exceptional strategy. The history report no longer assumes that stocks bought on a breakout alert but not confirmed as a breakout at day's end are sold at the next open.

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

ZSB Strategy Outperforms S&P 500 by factor of 9 in Bull Market

Since introducing the ZSB (Zacks Strong Buy) strategy, we have not seen the kind of gains that we would expect based on the backtest. We believe this is due to few companies issuing upwards earnings revisions but expect this will soon change as the economy improves. The evidence for this is found in a comparison of the performance of the ZSB strategy compared to the S&P 500 from July 2006 to September 2007. During this time, the S&P 500 had its best period in the last five years and gained 15%. Over the same period, our recommended ZSB strategy (2 positions, stop loss 3%) would have returned 136%.

This performance can be verified using our ZSB Backtest Tool which is freely available to all.


 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 8743.94 7.33% -0.37% Down
NASDAQ 1886.61 7.44% 19.63% Up
S&P 500 940.38 6.97% 4.11% Down
Russell 2000 519.22 7.95% 3.96% Up
Wilshire 5000 9634.89 7.05% 6.03% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
7.95 %
NASDAQ Composite
12.76 %
NASDAQ Composite
23.36 %
NASDAQ Composite
19.63 %
 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 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 26 16.08 8.14% 5.86%
Last Week 7 14.69 10.99% 7.37%
13 Weeks 208 16.69 22.91%
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 RT RUBY TUESDAY INC 111
Top Technical GERN Geron Corporation 103
Top Fundamental ATHN ATHENAHEALTH, INC. 53
Top Tech. & Fund. EBIX Ebix Inc 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
Best Overall DGII Digi International Inc 88
Top Fundamental MELI MercadoLibre 59
Top Tech. & Fund. MELI MercadoLibre 59
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.

If you received this newsletter from a friend and you would like to receive it regularly please go to the BreakoutWatch.com site and enter as a Guest. You will then be able to register to receive the newsletter.

Copyright © 2009 NBIcharts, LLC dba BreakoutWatch.com. All rights reserved.
" BreakoutWatch," the BreakoutWatch.com "eye" logo, and the slogan "tomorrow's breakouts today" are service marks of NBIcharts LLC. All other marks are the property of their respective owners, and are used for descriptive purposes only.

BreakoutWatch is not affiliated with Investor's Business Daily or with Mr. William O'Neil. Our site, research and analysis is supported entirely by subscription and is free from advertising.

To unsubscribe from further breakoutwatch.com newsletters, please click here.