Weekly Newsletter 07/23/10
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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 NASDAQ Composite closed the week with an accumulation day on above average volume. Volumes on Friday's in July are usually thin so this could be taken as a sign of returning confidence. However, caution is due as the volume increase was spurred after rumors of a takeover of Genzyme Corp., which jumped 10%, and the sudden movement provoked a halt in trading under the circuit breaker rules. The buying spread to other stocks as traders smelled a buying opportunity after choppy morning trading in response to the European Banks stress test results.

The substantial gains for the week (see table below) left the NASDAQ, Russell 2000 and Wilshire 5000 breaking even for the year to date with the DJI and S&P 500 still marginally below water. As earnings are expected to continue to exceed those of the 2nd quarter a year ago, the current rally is expected to continue as earnings season progresses. Further technical signs that the NASDAQ rally can continue are that the index
  1. closed above the medium term trend line
  2. closed above resistance at 2630
  3. closed above the 50 day moving average
  4. is showing improving relative strength compared to the S&P 500.
NASDAQ Composite

The weeks gains produced 22 breakouts with an average gain by Friday's close of 5.4%. This is a welcome improvement compared to the 13 week average of just over 8 breakouts for an average gain of less than 4%.

 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
This section will return at the end of August after the kids return to school.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 10424.6 3.24% -0.03% Up
NASDAQ 2269.47 4.15% 0.01% Down
S&P 500 1102.66 3.55% -1.12% Down
Russell 2000 650.65 6.6% 2.61% Down
Wilshire 5000 11507.7 3.99% 0.09% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
6.6 %
Dow Jones
-12.3 %
Russell 2000
5.43 %
Russell 2000
2.61 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Oil & Gas Pipelines Oil & Gas Pipelines 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 22 7.54 6.2% 5.35%
Last Week 7 7.31 6.89% 5.94%
13 Weeks 103 8.69 15.63%
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 GGAL Grupo Financiero Galicia S.A. 115
Top Technical MEND Micrus Endovascular Corp. 45
Top Fundamental CBD Companhia Brasileira de Distribuicao 41
Top Tech. & Fund. MEND Micrus Endovascular Corp. 45
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 OIIM O2Micro International Ltd. 104
Top Technical PSMT PriceSmart Inc. 42
Top Fundamental IDC Interactive Data Corporation 36
Top Tech. & Fund. PSMT PriceSmart Inc. 42
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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