Weekly Newsletter 08/07/10
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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  
Our market trend indicator for the S&P 500 turned to "Up" this week, putting all our trend indicators in agreement. Although the major indexes showed healthy gains for the week, as most companies continued to report higher earnings, shares slipped on Thursday and Friday on downbeat economic news.  Friday's job creation numbers showed the economy is slowly adding jobs, but not at a rate that is going to change consumer's sense that if we are not in a recession, it certainly feels like one. This has led to the Federal Reserve reporting that outstanding U.S. consumer credit shrank again in June, providing more evidence that consumers don't want to spend. GDP, of which consumer spending comprises two thirds, will likely continue to fall while this sentiment prevails.

Both the S&P 500 and NASDAQ Composite have broken out from a head and shoulders bottom (bullish) pattern and are now in an "ascending triangle" pattern (orange lines). The ascending triangle is not a pattern we have any data on but Bulkowski's Encyclopedia of Chart Patterns describes it as a bullish consolidation pattern with a high success rate once a breakout to the upside is confirmed.

NASDAQ Composite
S&P 500

In the case of the NASDAQ a breakout to the upside would be confirmed if the index overcomes resistance at 2341. For the S&P 500, a breakout would be confirmed if the index overcomes resistance at 1131.

In both cases, we would be more confident of the bullish trend in these charts if the upper bound of the triangle were flat. In both cases, a break below the ascending line of daily lows would be bearish.

The number of breakouts almost doubled last weeks count and comfortably outperformed the major indexes at week's end.
 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 10653.6 1.79% 2.16% Up
NASDAQ 2288.47 1.5% 0.85% Up
S&P 500 1121.64 1.82% 0.59% Up
Russell 2000 650.68 -0.03% 2.62% Up
Wilshire 5000 11680.3 1.63% 1.59% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
S&P 500
1.82 %
Dow Jones
-0.36 %
Russell 2000
9.73 %
Russell 2000
2.62 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Oil & Gas Pipelines Oil & Gas Pipelines Specialty Eateries 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 35 8.92 7.51% 3.18%
Last Week 18 7.54 6.06% 2.15%
13 Weeks 129 9.85 14.36%
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 GRT Glimcher Realty Trust 114
Top Technical KEI Keithley Instruments Inc. 70
Top Fundamental UFPT UFP Technologies Inc. 77
Top Tech. & Fund. FNSR Finisar Corp. 57
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. 87
Top Technical XTEX Crosstex Energy LP 72
Top Fundamental MRX Medicis Pharmaceutical Corp. 41
Top Tech. & Fund. POL PolyOne Corporation 85
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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