Weekly Newsletter 11/05/10
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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 NASDAQ Composite closed the week at its highest level since January 4, 2008, and has gained 104% since its March, 2009 low. The index is now just 303 points below its November 2, 2007 high. A further gain of 12% from here will see the index reach that significant point of resistance due to lots of overhead supply. Compare this performance with that of the S&P 500, which has risen 82% from its March, 2008 low, but still has to gain a further 28% to recover to its 2007 high.

Does this mean that the S&P 500 has more upside potential? Possibly, as the QE2 stimulus will flow to the major banks first. With money being cheap due to low interest rates the reward to risk ratio for equities looks more attractive so we will see much of the QE2 money flow from the banks into the equities markets. They have to put the money somewhere (or inflation will erode its value) and they are unwilling to lend to businesses and individuals while the economy is still sputtering. Note that the S&P 500 gained 3.6% this week compared to the NASDAQ's 2.85%.

Nasdaq Composite

S&P 500

The number of successful breakouts jumped to 53 this week with an average gain at Friday's close of 5.2% easily beating the returns of the major indexes.

 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

A potential subscriber asked us
"Lets say I can set up breakout alerts of my own on my broker's software (price and volume),but I'd like the watchlist on your site to give me a very small amount of candidates, preferably which already meet cantata conditions and telling me in advance how much volume will be needed for a 1.5 vol breakout. Which one of your subscriptions will cover it?"
Since few of us are as wealthy as we were, this topic may be of interest to our newsletter readers so here's the answer.

The minimum subscription that gives access to our watchlists each day is the Silver subscription. At this level you can see all watchlists, all symbols and all the technical and fundamental analysis associated with each symbol, including breakout price and breakout volume at the 1.5 times average daily volume level.

At the Silver level you don't get access to
  • email alerts
  • filters
  • personal watchlists
  • watchlist downloads
  • chart browser
  • database search
but you can still sort each watchlist by RS Rank, price, volume, and technical and fundamental rankings and see the stocks that meet out target criteria (MTC). You also have unlimited access to the CANTATA Evaluator. By sorting you can make the cream rise to the top and then perform due diligence on just a few stocks before placing an order with your broker. By the way, each watchlist is sorted initially by descending RS Rank, as that is the criterion we have found most important in determining performance after breakout.

A Silver subscription costs $38.50 a month with hefty discounts for longer periods.

For the even more budget conscious, there is also our "essential" service which still gives you access to the watchlists and CE (only for watchlist stocks) for just $19.95 a month. the url for the essential service is http://essential.breakoutwatch.com.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 11444.1 2.93% 9.74% Up
NASDAQ 2578.98 2.85% 13.65% Up
S&P 500 1225.85 3.6% 9.93% Up
Russell 2000 736.59 4.73% 16.17% Up
Wilshire 5000 12870.4 3.69% 11.94% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
4.73 %
Russell 2000
12.69 %
NASDAQ Composite
13.83 %
Russell 2000
16.17 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Silver Silver Beverages - Brewers REIT - Residential
 Most Improved Industry (by change in technical rank2)
Wholesale - Other
+ 121
Processing Systems & Products
+ 117
+ 154
Long Distance Carriers
+ 189
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 53 28.69 8.12% 5.24%
Last Week 33 27.38 10.64% 6.33%
13 Weeks 390 31 16.8%
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 REXI Resource America, Inc. 118
Top Technical PSUN Pacific Sunwear of California, Inc. 117
Top Fundamental PWER Power-One, Inc. 108
Top Tech. & Fund. PWER Power-One, Inc. 108
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 GSIT GSI Technology, Inc. 115
Top Technical ACAT Arctic Cat Inc. 77
Top Fundamental GSIT GSI Technology, Inc. 115
Top Tech. & Fund. GSIT GSI Technology, Inc. 115
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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