Weekly Newsletter 01/28/11
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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 major indexes gave up all of their gains for the week on Friday as instability in Egypt mounted and the price of oil futures rose. Well over a million barrels of oil move daily through the Suez canal so the potential is very real for any disruption to further damage western economies. The likelihood of a closing of the canal has to be considered remote but as long as the situation is unstable market volatility will remain high.

These geopolitical concerns coincided with a disappointing GDP report which fell below expectations, a large drop in profits at Ford Motor, falling Windows sales at Microsoft and a warning from Amazon that earnings may miss analyst's projections.

Confidence had been building throughout the week after last week's mild correction. Our equivolume chart, which succinctly combines price and volume, dramatically illustrates how fear overwhelmed mounting optimism. That optimism may return once the situation is resolved but that could take a while. Demonstrations in Egypt after the apparent successes in Tunisia remind me of 1848 when revolutions swept across Europe. We could see a spreading backlash against repressive arab regimes that will roil markets for some time.

NASDAQ Equivolume Chart

The failure of the index to test the January 18 high shows technical weakness and if uncertainty continues we could see a test of the 50 day moving average.


 New Features this Week Additional Value that we added this week
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This Week's Top Tip Tips for getting the most out of our site

Although our market trend signals still point up, I think its wise to sit things out until the smoke clears.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 11823.7 -0.41% 2.13% Up
NASDAQ 2686.89 -0.1% 1.28% Up
S&P 500 1276.34 -0.55% 1.49% Up
Russell 2000 775.4 0.29% -1.05% Up
Wilshire 5000 13450.8 -0.36% 1.21% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
0.29 %
Russell 2000
7.16 %
NASDAQ Composite
19.17 %
Dow Jones
2.13 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Metal Fabrication Farm & Construction Machinery Silver Auto Parts Stores
 Most Improved Industry (by change in technical rank2)
Jewelry Stores
+ 79
Diversified Computer Systems
+ 88
Lumber - Wood Production
+ 147
+ 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 12 16.69 4.88% 0.14%
Last Week 11 18.15 2.51% -2.65%
13 Weeks 265 19.08 13.93%
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 OSUR OraSure Technologies, Inc. 102
Top Technical KRO Kronos Worldwide, Inc. 47
Top Fundamental PWER Power-One, Inc. 77
Top Tech. & Fund. ATHR Atheros Communications, Inc. 45
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 PLA Playboy Enterprises, Inc. 79
Top Technical PLA Playboy Enterprises, Inc. 79
Top Fundamental FTNT Fortinet, Inc. 51
Top Tech. & Fund. FTNT Fortinet, Inc. 51
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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