Weekly Newsletter 09/03/10
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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  
We welcome several new subscribers this week. This would appear to reflect a growing confidence among the self-directed investor community that the summer bear market is approaching its end. Let's hope this is so!

For their benefit, let me remind everyone that our weekly newsletter usually starts out with a review of the NASDAQ Composite chart as most breakouts come from that market. We typically look at the 6-month daily candlestick chart with a Bollinger Bands overlay for 1 and 2 standard deviations, and the 50 and 200 day simple moving averages.

This week, we are going to vary that scenario slightly by showing the 50 day (red) and 10 day (blue) exponential moving averages. This is because these two moving averages are inputs to our market trend model. When the 10 day ema is above the 50 day ema then our model considers the trend to be up, and when the 10 day ema is below the 50 day ema, the trend is down.

NASDAQ Composite

You can see that the sizable upward moves on Thursday and Friday were on light volume so we would like to see stronger volume when the markets open next Tuesday to confirm the trend. However, we can see that if the upward trend continues we are still a couple of sessions away from our trend model turning positive. If so, the index will encounter resistance at 2310 and a break out above that level would confirm a new bullish phase.

The number of breakouts jumped to double the 13 week average this week with an average gain after breakout that beat the market averages. If volume had been closer to the 50 day average on Thursday and Friday there would have been many more.

We wish all our readers a happy and safe Labor Day Weekend.

 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 wil return next week.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 10447.9 2.93% 0.19% Up
NASDAQ 2233.75 3.72% -1.56% Down
S&P 500 1104.51 3.75% -0.95% Down
Russell 2000 643.36 4.31% 1.47% Down
Wilshire 5000 11524.8 3.85% 0.24% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
4.31 %
Dow Jones
5.19 %
Dow Jones
-1.12 %
Russell 2000
1.47 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
REIT - Residential REIT - Residential REIT - Residential 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 27 13.23 6.01% 4.64%
Last Week 16 11.38 5.69% 3.08%
13 Weeks 175 13.46 11.07%
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 NGD New Gold, Inc. 109
Top Technical TPCG TPC Group, inc.
Top Fundamental HEI HEICO Corp. 31
Top Tech. & Fund. HEI HEICO Corp. 31
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 EDR Education Realty Trust Inc. 86
Top Technical SHS Sauer-Danfoss Inc. 61
Top Fundamental CASY Casey's General Stores Inc. 49
Top Tech. & Fund. CASY Casey's General Stores Inc. 49
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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