Weekly Newsletter 06/18/10
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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  

I apologize for the lateness of this week's newsletter and also its brevity. My elder son was competing in a Hershey's track meet yesterday so I was not at my computer. (Once again I was the insufferable proud father as he won his 400m and 800m races).

This was a good week for the markets as our market summary table shows. The NASDAQ Composite gained almost 3%, Friday close to Friday close. The three month daily chart shows the NASDAQ has technically broken out from a double-bottom but volumes have been anemic (except for Friday's quadruple witching day surge) so I am not optimistic that the rally will hold. However, summertime volumes are usually lower so we may see the indexes continue to edge higher but there is still sufficient uncertainty, even though volatility diminished this week, to keep gains at modest levels.

NASDAQ Composite

I continue to believe we have a better than 50-50 chance of a double-dip based on the research I quoted two weeks ago. John Maudlin's latest e-Letter also provides additional cogent arguments for that view. One positive development today is that the New York Times is reporting that China has agreed to allow its exchange rate to gradually float upwards. In theory this should reduce US and European imports from China and increase exports to China restoring, eventually, an improved balance of trade. However, it could also slow China's growth with generally negative consequences for the rest of Asia.

Barry Ritholz has, in my view, an excellent critique of Greenspan's latest WSJ Op-Ed. http://www.ritholtz.com/blog/2010/06/greenspan-deficit-reduction/
 New Features this Week Additional Value that we added this week
A subscriber requested access to our historical watchlist data so I created a page which allows the download of historical watchlist data by date in csv format. You access the page as follows:

This Week's Top Tip Tips for getting the most out of our site
 Buy on Alert Strategy Revisited

I subscriber asked if under the Buy on Alert strategy he should be holding TEN and PAY after we issued an alert on them on Friday. The answer is no.

Neither stock had a projected volume of at least 3 times average daily volume and the NASDAQ market trend indicator is still down.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 10450.6 2.35% 0.22% Up
NASDAQ 2309.8 2.95% 1.79% Down
S&P 500 1117.51 2.37% 0.22% Up
Russell 2000 666.92 2.76% 5.18% Down
Wilshire 5000 11669.9 2.37% 1.5% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
2.95 %
Russell 2000
-1.03 %
Russell 2000
9.23 %
Russell 2000
5.18 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Specialty Eateries Toy & Hobby Stores Toy & Hobby 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 5 10.77 4.87% 3.16%
Last Week 4 12.54 5.81% 2.36%
13 Weeks 155 12.92 15.47%
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 CSA Cogdell Spencer Inc. 110
Top Technical PWER Power-One Inc. 91
Top Fundamental MED Medifast Inc. 73
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 PCM PCM Fund Inc. 76
Top Technical ASPS Altisource Portfolio Solutions S.A. 48
Top Fundamental PCM PCM Fund Inc. 76
Top Tech. & Fund. ASPS Altisource Portfolio Solutions S.A. 48
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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