Weekly Newsletter 09/05/09
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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  

This week we'll analyze the NASDAQ Composite weekly chart as there are a number of interesting features. Also, it is on the NASDAQ Exchange that we expect the majority of stock breakouts. The chart shows the index found support at the 50 day moving average level this week after it looked as though investors were losing confidence that the rally could be sustained. The chart also shows the indecision present in the market for several weeks now. The 'Doji' pattern this week and in five of the last six weeks is indicative of a market looking for direction to the up- and down-side and not finding it.

Another feature of the chart is the tightening Bollinger Bands. The bands tighten as the daily trading range becomes less volatile and this is often a precursor to a breakout either to the up or downside.

Overall, the bias remains to the upside and as long as the economic news continues to improve, then we can expect that to continue, although at a slower pace than the last six months.


We wish our newsletter subscribers a happy and safe Labor Day weekend.

 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 recommendation for using the Zacks Strong Buy alerts is to buy as close to the alert price as possible. In other words, do not wait for the breakout to be confirmed but instead buy as soon as an alert is issued.

We wondered what the result would be if we applied the same buy strategy to our cup-with-handle list.

To compare the effects of buying on alert we looked at the highest intraday high reached for breakouts from the ZSB and CWH lists since March 9, when the market hit bottom.

We found that of the 57 alerts from the ZSB list (including our backtest data) the average gain to intraday high was 26.7% while the average gain to intraday high for CWH alerts, of  which there were 313, was 23.4%

After running a Student's t-test to see if the difference in the means was statistically significant, we found that the probability that the results were equivalent was just 0.33. This means that there was a meaningful difference in profits gained from the Zacks Strong Buy alerts.

This result shows that alerts from the Zacks Strong Buy list perform significantly better, on average, than alerts  from the cup with handle list. Since most of the ZSB alerts are also cup-with-handle alerts, it follows that the ZSB list is a useful filter for CWH alerts.

To receive alerts from the ZSB list you must be a subscriber to the Zacks Premium service. You can get a 30 day free trial from Zacks by clicking their logo:

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 9441.27 -1.08% 7.58% Down
NASDAQ 2018.78 -0.49% 28.01% Up
S&P 500 1016.4 -1.22% 12.53% Up
Russell 2000 570.5 -1.61% 14.23% Up
Wilshire 5000 10451.5 -1.21% 15.01% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
-0.49 %
NASDAQ Composite
7.57 %
Russell 2000
62.51 %
NASDAQ Composite
28.01 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Copper Auto Dealerships Auto Dealerships 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 4 10.77 12.67% 6.21%
Last Week 9 12.92 10.25% 1.12%
13 Weeks 141 13.31 22.19%
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 TLB Talbots Inc 119
Top Technical MSSR McCormick & Schmicks Seafood 89
Top Fundamental OII Oceaneering Internat 57
Top Tech. & Fund. OII Oceaneering Internat 57
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 CDE Coeur D'alene Mines Corp 70
Top Technical CDE Coeur D'alene Mines Corp 70
Top Fundamental CDE Coeur D'alene Mines Corp 70
Top Tech. & Fund. CDE Coeur D'alene Mines Corp 70
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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