Weekly Newsletter 08/27/10
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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 closed the week on a big rally with the major indexes recording an accumulation day but were still negative for the week. The markets took heart after Fed Chairman Bernanke glossed over dismal economic news, which downgraded second quarter growth to 1.6% from a previous estimate of 2.4%, and said that "Should further action prove necessary, policy options are available". The downward revision to GDP, and continuing high unemployment, makes it  clear that further action is necessary, so why is the Fed so reluctant to undertake those policy actions now?

The NASDAQ chart shows that Wednesday was a reversal day in that it closed higher after setting a local intraday low. O'Neil (CAN SLIM) followers consider this as a possible sign of a market bottom and look for a "follow through" day on the fourth through twelfth day after the reversal. As Wednesday counts as the first day, that means a follow through day could occur as early as Monday.

NASDAQ 3-Month Daily

While a short term bounce in the markets is possible, I believe the underlying trend remains downwards, so beware that a follow through day could be a "bull trap". Consumer spending is the key to the recovery. When the Consumer Metrics Institute's "Contraction Watch" indicator starts to trend upwards then we can have some measure of faith that a recovery is just a few weeks away. Unfortunately, the latest measures indicate the "Daily Growth Index has reached a year-over-year contraction rate of 5%, and it is rapidly closing the gap on the worst contraction rate observed during the 2008 Great Recession". In other words, the economy is heading towards another 2008 like recession.

 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 feature will return after Labor Day.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 10150.7 -0.62% -2.66% Up
NASDAQ 2153.63 -1.2% -5.09% Down
S&P 500 1064.59 -0.66% -4.53% Down
Russell 2000 616.76 0.98% -2.73% Down
Wilshire 5000 11097.6 -0.48% -3.48% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
0.98 %
Dow Jones
0.14 %
Dow Jones
-1.69 %
Dow Jones
-2.66 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
REIT - Residential REIT - Residential Specialty Eateries REIT - Residential
 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 15 11.38 3.85% 2.47%
Last Week 11 10.62 7.75% 2.17%
13 Weeks 149 11.46 10.91%
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 RQI Cohen & Steers Quality Income Realty Fund Inc. 118
Top Technical TPCG
Top Fundamental SQM Chemical & Mining Co. of Chile Inc. 39
Top Tech. & Fund. SQM Chemical & Mining Co. of Chile Inc. 39
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 ABBC Abington Bancorp Inc. 64
Top Technical BAK Braskem S.A. 58
Top Fundamental WCRX Warner Chilcott plc 47
Top Tech. & Fund. WCRX Warner Chilcott plc 47
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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