Weekly Newsletter 09/25/10
Login   Trial   Guest
You are receiving this email because you are or were a BreakoutWatch.com subscriber, or have subscribed to our weekly newsletter. This newsletter summarizes the breakout events of the week and provides additional guidance that does not fit into our daily format. It is published each weekend.
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  

After trending down on Tuesday through Thursday, the major indexes staged a strong rally on Friday that left the indexes with a nice gain for the week. Friday's bullish mood came after core capital expenditure for durable goods was better than expected and followed the Fed promising to keep interest rates low for an extended period. It was also clear they are ready to print more money, if necessary, as inflation expectations are currently low. Continued cheap money, with the promise of more to come, is good for asset prices, so as long the domestic economy does not threaten a double dip and global conditions continue to improve, then the markets will continue to move higher. In the global context, markets in South Korea, Thailand, Indonesia, India, Singapore and Philippines have risen to multi-year highs, and for Jakarta, to an all time high. (See Succinct summation of week’s events).

Also at The Big Picture, we had confirmation of what has been visible in our daily market commentaries and charts - volumes are falling.

"The Flash Crash [in May] erased $862 billion in equity value in 20 minutes. Since then through August, investors have withdrawn nearly $57 billion from U.S. stock mutual funds, the most during any four-month period since 2008, according to the Investment Company Institute. Third quarter average daily trading volumes are down more than 25% from the second quarter and down more than 15% year over year. "

A weekly chart of the NASDAQ Composite confirms the downward trend in volumes. NASDAQ volumes did rise above the 50 day average for the week, but the biggest volume days were the two distribution days on Tuesday and Wednesday, so although the index gained for the week, the contribution of volume to the gain is questionable. How long can the markets continue to rise if volume remains anemic?


The three mid-week down days kept the number of breakouts below last weeks level at 38 but that was still twice the 13 week average.

 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

Limiting the Number of Email Alerts You Receive

Because we issue alerts when the breakout price is reached, regardless of the volume, a sudden spike in market valuations can lead to an excessively large number of alerts being issued.

When the markets opened on Friday, September 24, 2010, the leading indexes immediately gapped higher and had risen by over 1% by 10 am. In the first thirty minutes we issued 17 alerts and by the end of the day had issued a total of 67.

Of these, only 15 reached our nominal breakout volume of 1.5 times ADV with the result that your inbox was cluttered with many alerts which were never going to reach anything like a desirable volume level.

There are two ways you can limit the number of alerts you receive:

  1. Use a Personal Watchlist (PWL) to setup a list of stocks on which you only wish to receive alerts. If you haven't used the PWL mechanism, there are instructions on how to use it at our PWL Help page.
  2. Use filters to limit the characteristics of stocks on our watchlists so you only receive alerts when stocks meet your criteria. There is a video tutorial on how to do this.

How to Use Watchlist Filters

Not included in the video is the new filters that control when alerts are issued based on quasi-real time volume. These were described last week.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 10860.3 2.38% 4.15% Up
NASDAQ 2381.22 2.83% 4.94% Up
S&P 500 1148.67 2.05% 3.01% Up
Russell 2000 671.01 3% 5.83% Up
Wilshire 5000 11991.8 2.14% 4.3% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
3 %
NASDAQ Composite
7.06 %
Dow Jones
0.09 %
Russell 2000
5.83 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Beverages - Brewers Beverages - Brewers REIT - Residential REIT - Residential
 Most Improved Industry (by change in technical rank2)
Wholesale - Other
+ 76
Wholesale - Other
+ 77
Telecom Services - Foreign
+ 149
Music & Video Stores
+ 182
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 38 18.38 4.26% 2.86%
Last Week 45 15.77 6.39% 3.8%
13 Weeks 250 18.69 12.54%
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 OWW Orbitz Worldwide, Inc. 114
Top Technical URI United Rentals, Inc. 66
Top Fundamental LULU Lululemon Athletica Inc. 47
Top Tech. & Fund. LULU Lululemon Athletica Inc. 47
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 GTE Gran Tierra Energy, Inc. 98
Top Technical GTE Gran Tierra Energy, Inc. 98
Top Fundamental RNOW Rightnow Technologies Inc. 60
Top Tech. & Fund. IGTE iGate Corporation 66
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.

If you received this newsletter from a friend and you would like to receive it regularly please go to the BreakoutWatch.com site and enter as a Guest. You will then be able to register to receive the newsletter.

Copyright © 2010 NBIcharts, LLC dba BreakoutWatch.com. All rights reserved.
" BreakoutWatch," the BreakoutWatch.com "eye" logo, and the slogan "tomorrow's breakouts today" are service marks of NBIcharts LLC. All other marks are the property of their respective owners, and are used for descriptive purposes only.

BreakoutWatch is not affiliated with Investor's Business Daily or with Mr. William O'Neil. Our site, research and analysis is supported entirely by subscription and is free from advertising.

To unsubscribe from further breakoutwatch.com newsletters, please click here.