Weekly Newsletter 12/17/10
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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 opened the week with a gap up to 2645 as it appeared after the weekend that the compromise to extend the tax cuts would pass.  That was the high water mark for the week tested only briefly on Friday afternoon before the markets slipped back to close the week with only modest gains. The NASDAQ chart shows the trend is still upward but the failure of the index to breakthrough resistance at Monday's level is disturbing considering the massive stimulus being provided by the tax-cut compromise and the continuation of QE2, which was reconfirmed at the FOMC meeting on Tuesday.

NASDAQ Composite

The week's other economic news was also encouraging as US Retail Sales showed solid gains, the Philadelphia and NY Federal Reserve surveys showed continued expansion and initial unemployment claims continued to fall. So why did we not see a bigger gain for stocks?

Well, despite the intended goal of QE2 being to ease credit and keep long term interest rates low, the US consumer continues to deleverage their debt (the NY Times reported the use of credit cards over Thanksgiving weekend was the lowest in 27 years) and mortgage interest rates have climbed above 5% which threatens the housing market where we still have not hit bottom. So although the overall environment is bullish for stocks, and we expect the market will go higher in 2011, the markets will continue to climb a wall of worry over domestic economic prospects.

We wish all our subscribers and newsletter readers a safe and happy holiday season.

Thank you for your support in these difficult times.

 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

We are on vacation. This feature will return on January, 8, 2011

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 11491.9 0.72% 10.2% Up
NASDAQ 2642.97 0.21% 16.47% Up
S&P 500 1243.91 0.28% 11.55% Up
Russell 2000 779.52 0.35% 22.94% Up
Wilshire 5000 13143.5 0.29% 14.32% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
0.72 %
Russell 2000
19.66 %
Russell 2000
16.88 %
Russell 2000
22.94 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Silver Silver Silver Beverages - Brewers
 Most Improved Industry (by change in technical rank2)
Networking & Communication Devices
+ 73
Toy & Hobby Stores
+ 97
Staffing & Outsourcing Services
+ 162
+ 190
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 19 26.23 5.31% 2.63%
Last Week 18 27.46 5.41% 1.98%
13 Weeks 382 28.46 17.76%
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 FCH FelCor Lodging Trust Incorporated 93
Top Technical ZAGG Zagg Inc 90
Top Fundamental VMW VMware, Inc. 31
Top Tech. & Fund. VMW VMware, Inc. 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 REXI Resource America, Inc. 93
Top Technical REXI Resource America, Inc. 93
Top Fundamental CTSH Cognizant Technology Solutions Corp. 46
Top Tech. & Fund. INET Internet Brands, Inc. 52
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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