Weekly Newsletter 04/30/10
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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  

The correction we expected occurred this week as the Goldman Sachs investigations accelerated and the Eurozone failed to act decisively to address the debt problems of Greece. The correction came despite an earnings season for the record books and an improving economic picture.

The NASDAQ Composite completed a bearish Head and Shoulders Top pattern on Friday. 'Completion' occurs when the stock passes through the neckline (a line drawn through the lows between the two shoulders).


To determine the target loss after completion of the pattern, we measure the difference between the head and the neckline 9a) and then subtract it from the point where the price crosses the neckline(b). We find that this gives us a target very similar to the former resistance line at 2432 (c). Once passed, resistance becomes support, so we have two indicators that the index could fall to about 2430 before recovering. That is only 1.2% below Friday's close so we could expect a further decline on Monday with a late afternoon rally.

Weighing against this purely technical analysis is a deteriorating position in the Gulf as the oil spill threatens and the price of oil moves up in reaction to possible tighter drilling controls. Furthermore, although a Greek rescue plan is due to be completed by Sunday, massive street demonstrations will undoubtedly result and the Greek Government's resolve to implement severe austerity measures in the face of massive domestic revolt will continue to unbalance the financial markets.

 New Features this Week Additional Value that we added this week
Because of the importance of a high RS Rank (above 92) for the subsequent performance of a breakout, we have added the RS Rank to our 'Alerts Issued Today' and 'Alert Monitor' pages.
This Week's Top Tip Tips for getting the most out of our site

Last week we sought your guidance and the question was, given the limitations of volume data, should we send alerts on price alone?

The verdict is in: yes, send alerts on price alone.

Beginning Monday, we will send alerts as soon as a stock rises to its breakout price (long positions) or falls to its breakdown price (short positions). The alerts will include a note reminding you that volume has not been taken into consideration.

Included in each alert will be a link to Google Finance for the particular stock. There you can track the price in real time, compare it to other stocks in the same industry group and read the latest news on the company.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 11008.6 -1.75% 5.57% Up
NASDAQ 2461.19 -2.73% 8.46% Up
S&P 500 1186.68 -2.51% 6.42% Up
Russell 2000 716.6 -3.41% 13.02% Up
Wilshire 5000 12408.8 -2.64% 7.93% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
-1.75 %
Russell 2000
19.03 %
Russell 2000
27.33 %
Russell 2000
13.02 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Broadcasting - Radio Home Furnishing Stores Housewares & Accessories Housewares & Accessories
 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 17 17.31 8.82% 3.71%
Last Week 23 16.62 8.35% -1.24%
13 Weeks 247 18 19.98%
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 JASO JA Solar Holdings Co., Ltd. 117
Top Technical STBA S&T Bancorp Inc. 58
Top Fundamental CAAS China Automotive Systems Inc. 72
Top Tech. & Fund. CAAS China Automotive Systems Inc. 72
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 SPRD Spreadtrum Communications Inc. 111
Top Technical SOL ReneSola Ltd. 95
Top Fundamental JOBS 51job Inc. 56
Top Tech. & Fund. GSIT GSI Technology Inc. 108
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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