Weekly Newsletter 05/07/10
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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 markets fell like water over Niagara Falls this week as our chart of the NASDAQ Composite shows. The index has corrected 10.6% since the intraday high on April 26. With the Greek debt crisis still unresolved the markets are extremely volatile and easily spooked. The IMF Executive Board meets on Sunday to review Greece's request for a 30 Billion Euro credit facility and Common Market leaders meet on Monday to approve a 110 billion Euro 3-year loan. If the European debt crisis is not resolved by the time the markets open on Monday, there is the potential for the index to test the lows of last December and February which would represent a correction of 17%, just short of signaling a new bear market.

NASDAQ Composite

The Russell 2000 and Wilshire 5000 are the only major indexes to have held onto a small gain for the year. As of Friday's close, our market indicators were still showing a positive trend but the NASDAQ chart shows that the trend is on the cusp of reversal. Our NASDAQ trend is determined using the crossover of the 10 and 50 day exponential moving averages and as you can see, the crossover is about to occur if the sell-off continues.

With the markets in steep decline, the number of breakouts fell to a meager 8 this week, but they did close for a positive gain, on average, no mean feat in such a terrible market.

 New Features this Week Additional Value that we added this week

We are now sending out alerts based solely on a stock meeting its break out (or break down) price. Projected daily volume is no longer a factor. However, we are still reporting a breakout as confirmed if the price holds above the breakout price and average volume is at least 1.5 times the 50 day average.

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


The action on Thursday and Friday may be indicative of capitulation but it would be wise to wait for a reversal (a close higher than the open after a new intraday low) before taking any new long positions.


 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 10380.4 -5.71% -0.46% Up
NASDAQ 2265.64 -7.95% -0.15% Up
S&P 500 1110.88 -6.39% -0.38% Up
Russell 2000 653 -8.88% 2.99% Up
Wilshire 5000 11560 -6.84% 0.54% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
-5.71 %
Russell 2000
10.12 %
Russell 2000
12.52 %
Russell 2000
2.99 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Toy & Hobby Stores Toy & Hobby Stores Home Furnishing Stores 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 8 17.69 10.88% 1.16%
Last Week 18 17.31 10.31% -3.41%
13 Weeks 240 18.23 20.88%
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 THM International Tower Hill Mines Ltd. 106
Top Technical SWWC Southwest Water Co. 55
Top Fundamental NEOG Neogen Corp. 46
Top Tech. & Fund. MED Medifast Inc. 73
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 EGO Eldorado Gold Corp. 76
Top Technical EGO Eldorado Gold Corp. 76
Top Fundamental EGO Eldorado Gold Corp. 76
Top Tech. & Fund. EGO Eldorado Gold Corp. 76
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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