Weekly Newsletter 10/30/09
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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  

There were no breakouts this week! That's a sure sign that the best thing to do is to hold off on taking new positions and take profits where you can and cut losses where you can't.

Although the market moved higher on Thursday on the strength of the 3rd Quarter GDP number, the savvy investor recognized that the number was artificially inflated by Government spending and volume was notably weaker than the day before. A reverse on Friday was to be expected but weaker than expected consumer spending and no increase in incomes, despite the GDP growth, turned the reversal into a rout. Although the markets closed a little above the day's lows on Friday, on balance it looks as though the consolidation will continue.

Thursday's gains were insufficient to support the upward trend of the Russell 2000 and our trend indicator turned downward. The trend indicator includes consideration of the crossover of two exponential moving averages which are show on this chart.

Russell 2000

The NASDAQ trend signal uses slightly different ema's (because the volatilities of the two indexes are different) but we see that the crossover point is fast approaching for the index also. The NASDAQ is also testing support at 2040. On the more optimistic side, we see that the NASDAQ has fallen below its 2-standard deviation Bollinger Band which can be a signal that a rebound is near. On the other hand, stocks have a tendency to track the outer band for several days before turning around.

NASDAQ Composite

 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
No top tip this week.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 9712.73 -2.6% 10.67% Down
NASDAQ 2045.11 -5.08% 29.68% Up
S&P 500 1036.18 -4.02% 14.72% Up
Russell 2000 562.77 -6.34% 12.68% Down
Wilshire 5000 10619 -4.48% 16.86% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
-2.6 %
Dow Jones
3.37 %
NASDAQ Composite
18.96 %
NASDAQ Composite
29.68 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Broadcasting - Radio Publishing - Newspapers Copper Auto Dealerships
 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 11.15 0% 0%
Last Week 12 12.08 5.37% -9.97%
13 Weeks 156 12.38 19.37%
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 ELRN Elron Electronic Ind Ltd 89
Top Technical CBOU Caribou Coffee Company Inc 78
Top Fundamental TRCR Transcend Services Inc 59
Top Tech. & Fund. TRCR Transcend Services 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
There were no breakouts this week, so no second chances.
Company Name
Expected Gain1
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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