Weekly Newsletter 09/11/09
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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  

Our expectations that the rally would resume and that tightening Bollinger Bands could lead to a breakout were confirmed this week as the market continued the rally that resumed last Friday. The NASDAQ Composite, and the other indexes too, set new 11 month highs this week and broke above the two-standard deviation Bollinger Band before profit taking saw a mild pull-back on Friday. The 6-month chart of the NASDAQ shows that it is still below its medium term trend line so further gains could be made in the coming week.

NASDAQ Composite

Friday's pull back was to be expected following the sharp gains made in the previous five sessions, particularly as investors are nervous that the current improvements in the global and domestic economies are fragile because some analysts have put the risk of the economy sliding back into recession as high as 1-in-3. But we are an optimistic bunch so the tendency remains to believe that things will get better, not worse.

There is some further support for the bullish case in an article by Barry Ritholz who uses an AAII chart to show that private investors are below the long term average asset allocation to stocks and that this condition is usually followed by an increased allocation in later months. In other words, there is the potential for more money to move into stocks from other assets which will drive prices higher.

 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

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 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 9605.41 1.74% 9.45% Down
NASDAQ 2080.9 3.08% 31.95% Up
S&P 500 1042.73 2.59% 15.44% Up
Russell 2000 593.59 4.05% 18.85% Up
Wilshire 5000 10752.3 2.88% 18.32% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
4.05 %
Russell 2000
12.67 %
Russell 2000
51.01 %
NASDAQ Composite
31.95 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Copper Copper 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 21 11.15 8.22% 4.48%
Last Week 5 10.77 17.49% 6.45%
13 Weeks 152 11.92 21.47%
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 EVOL Evolving Systems Inc 129
Top Technical MSSR McCormick & Schmicks Seafood 87
Top Fundamental COMV COMVERGE, INC. 76
Top Tech. & Fund. COMV COMVERGE, INC. 76
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 ADPI American Dental Partners 73
Top Technical ADPI American Dental Partners 73
Top Fundamental ADPI American Dental Partners 73
Top Tech. & Fund. ADPI American Dental Partners 73
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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