Weekly Newsletter 02/19/11
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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  

NASDAQ Ascending Triangle

The NASDAQ Composite continued its ascending triangle pattern and is closing in on its 2007 high set on October 31, 2007. In fact, the index needs just another 37.8 points (1.3%) before it reaches that level.

Coincidentally, the 2861 resistance level coincides with the ascending triangle upper bound so we can expect 2861.5 to be a major resistance level. It may take two or more attempts to break through that level but a breakout on strong volume would be a strong bullish signal.

Equally, failure to breach the 2861 level and a pullback on higher volume would signal the start of a correction.

The third possibility, and the most likely in my view, is that the NASDAQ (and other indexes too) will enter a trading range which will ultimately resolve to the upside.

These points on a chart where the slope changes direction are called "Inflection points". I'm betting that we are approaching a special case of an inflection point, called a saddle point.

The markets are closed on Monday for the President's Day holiday. Enjoy your long weekend!
 New Features this Week Additional Value that we added this wee

There are no new features this week.

This Week's Top Tip Tips for getting the most out of our site
Ritholz Trading Rules

One of our favorite blogs is Barry Ritholz's "The Big Picture".

Earlier this week he published a list of recommended rule sets to read. You may enjoy them over the weekend.

Livermores Seven Trading Lessons

Bob Farrell’s 10 Rules for Investing

John Murphy’s Ten Laws of Technical Trading

Rules for Shorting

Art Huprich’s Market Truisms and Axioms


Lessons from Merrill Lynch

Rosie’s Rules to Remember

The Zen of Trading

One of the delights in reading "The Big Picture" are the generally well informed (and often amusing) comments from contributors. You can see the entire post containing this list here.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 12391.2 0.96% 7.03% Up
NASDAQ 2833.95 0.87% 6.83% Up
S&P 500 1343.01 1.04% 6.79% Up
Russell 2000 834.82 1.55% 6.53% Up
Wilshire 5000 14193.7 1.06% 6.8% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Russell 2000
1.55 %
Russell 2000
15.25 %
Russell 2000
36.68 %
Dow Jones
7.03 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Farm & Construction Machinery Farm & Construction Machinery Silver Silver
 Most Improved Industry (by change in technical rank2)
Broadcasting - Radio
+ 109
Broadcasting - Radio
+ 122
Diversified Computer Systems
+ 159
Long-Term Care Facilities
+ 179
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 16 14.85 8.19% 4.05%
Last Week 24 14.69 7.62% 5.68%
13 Weeks 221 15.92 14.76%
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 KOG Kodiak Oil & Gas Corp. 107
Top Technical CTE SinoTech Energy Limited - ADS 104
Top Fundamental UHAL AMERCO 43
Top Tech. & Fund. CMG Chipotle Mexican Grill, 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 HOOK Craft Brewers Alliance, Inc. 97
Top Technical MU Micron Technology, Inc. 69
Top Fundamental DECK Deckers Outdoor Corporation 47
Top Tech. & Fund. DECK Deckers Outdoor Corporation 47
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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