Weekly Newsletter 08/13/10
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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 bullish ascending wedge pattern we identified last week broke down on Tuesday in response to Ben Bernanke's comment that the economy faces "unusual uncertainty", downward revisions to the GDP forecast for the rest of the year and a probable revision of second quarter growth down to below 1.5%. The NASDAQ Composite found support on Thursday at the 2160 level. Although Friday's close was above that level, the index nevertheless was down for the day so we are likely to see the 2160 level tested again.

NASDAQ Composite

Our market trend indicator turned negative for the Russell 2000 on Thursday and for the NASDAQ Composite on Friday (more on the trend indicators below).

Regular readers of this newsletter will know that we have been focusing on the Consumer Metrics Institute's Daily Growth Index in recent weeks. That index predicted the economic slowdown we saw in the second quarter and continues to show that the economic environment will worsen. If GDP trends continue to follow the Daily Growth Index downwards then we can anticipate the bear market in equities will worsen in the months to come, unless more stimulative "quantitative easing" by the Federal Reserve than has been undertaken so far materializes.

 New Features this Week Additional Value that we added this week
A subscriber requested that I update our charts showing the benefits of being in or out of the markets using our market trend signals.

This can now be done using our Stock Timeliness Checkup (menu choice: Evaluate > Analytical Tools) by using our index symbol in place of a stock symbol. The index symbols to use are:

NASDAQ Composite: IXIC
S&P 500: SPX
Dow Jones 30: DJI
Russell 2000: RUT
Wilshire 5000: DWT

For example, enter IXIC as the symbol and choose NASDAQ as the index signal. The results show that if you had bought the NASDAQ Composite 5 years ago at2160.97 and sold on Thursday night, you would have made a profit of just : $29.30  (1.36%) but if you had bought and sold using the trend indicator you would have made $740.10 (34.25%).

Market Signals

This Week's Top Tip Tips for getting the most out of our sitT
This feature wil return after Labor Day.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 10303.2 -3.29% -1.2% Up
NASDAQ 2173.48 -5.02% -4.22% Down
S&P 500 1079.25 -3.78% -3.21% Up
Russell 2000 609.49 -6.33% -3.88% Down
Wilshire 5000 11203.5 -4.08% -2.56% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
-3.29 %
Dow Jones
-2.98 %
Dow Jones
2.02 %
Dow Jones
-1.2 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
REIT - Residential 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 14 9.92 5.74% -2.24%
Last Week 36 8.92 8.84% -1.41%
13 Weeks 135 10.54 14.52%
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 119
Top Technical AEZ American Oil & Gas Inc. 106
Top Fundamental GSIT GSI Technology Inc. 103
Top Tech. & Fund. GSIT GSI Technology Inc. 103
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 MBI MBIA Inc. 88
Top Technical MBI MBIA Inc. 88
Top Fundamental LSTZA Liberty Starz Group 36
Top Tech. & Fund. LSTZA Liberty Starz Group 36
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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