|Weekly Newsletter 09/17/10|
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summarizes the breakout events of the week and provides additional guidance
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The NASDAQ Composite comfortably broke through resistance at 2309 to close the week at 2315. This is significant because it failed to pierce resistance at this level in August. It faces its next test at 2341. The NASDAQ was the strongest performing index as technology companies are expected to benefit most as the recovery gathers pace.
The chart shows a volume spike on Friday but this was due to Friday being a 'quadruple witching day' when volumes always increase as options and futures contracts expire and are re-negotiated.
Our trend model turned positive for all the major indexes this week. This is consistent with the more bullish outlook among investors. The American Association of Individual Investors (AAII) reports that bullish sentiment is at its highest level since August, 2009. (If you are a contrarian, this may not be good news!) They offer two reasons:
|New Features this Week||Additional Value that we added this week|
Real Time Volume Filters
A new addition to the cup-with-handle watchlist filter options allows you to restrict email alerts to only those CwH breakouts that meet a specific volume level.
This goes into effect on Monday, September 20, and is available to Trial and Platinum subscribers.
This new option allows you to receive alerts at the higher volume levels we have identified as necessary for the most successful breakouts.
|This Week's Top Tip||Tips for getting the most out of our site|
Using Real Time Volume Filters
Platinum subscribers can set parameters that control when and on what basis they receive email alerts. These alerts are controlled from the "Filter Settings" tab on each watchlist.
The cup-with-handle watchlist now has an additional feature that allows you to set a real time volume threshold. The threshold can be higher or lower than the default volume threshold which is 150% of the 50 day moving average volume, and you can choose to receive alerts based on an actual volume threshold or a projected volume threshold.
A projected volume threshold is based on a straight line extrapolation of the volume at a specific time until the end of the session. For example, a session lasts 6.5 hours, so let the volume after 30 minutes by 100k shares, then the projected volume to the end of the session will be
100k / 0.5 * 6.5 => 1300k shares
If the projected volume threshold were set at 1300k shares, then in this case an alert would be issued 30 minutes into the session.
If an actual volume threshold were set at 1300k shares, then an alert would not be issued until the actual daily volume level was reached, which would be some time later.
The projected and actual volume filters are mutually exclusive - you can set one or the other. If zero, then the volume filter is ignored.
This example shows how an actual volume alert filter would be set combined with an MTC (Meets Target Criteria) filter.
The filters outlined in blue represent characteristics of the stock that are known before breakout and the two filters outlined in red are the volume filters that are applied in real time.
In this example, an alert would be sent when the actual volume reached 2.25 times the 50 day average volume.
The Backtest, which can be used to test which filter values have worked in the past, does not take into account these new volume filters.
Also, although our price data is in real time, our volume data is delayed by 15-20 minutes. For that reason, you may want to set the real time volume alert level
|Market Summary||Overview of market direction and industry rotation|
|Weekly Breakout Report||How confirmed breakouts performed this week|
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|
|Top Second Chances||Stocks that broke out this week and are still in buyable range|
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