Weekly Newsletter 04/08/11
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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 NASDAQ Composite failed to hold above resistance at 2802 and made a modest loss on the week, as did the other major indexes with the exception of the DJI which showed a modest gain. While the longer term prospects for economic recovery look sound, there will be some short term turbulence as markets continue to fret over the price of oil, turbulence in the Middle East, an end to quantitative easing, rising interest rates in Europe, and possibly soon here at home, and the possibility of a government shutdown (edit: seems to have been averted).

NASADQ Composite

But are these explanations sufficient to explain what is really happening in the markets? These economic and geopolitical events seem like rational explanations but when we learn that the average holding time of a position is 22 seconds, that 73% of all trades are algorithmic in origin placed by supercomputers co-located near the exchanges to reduce latency and who engage in quote stuffing to confuse their algorithmic competitors, do we really have a grasp on what is happening?

This excellent presentation was a revelation to me. While we all know that programmed trading is extensive, just how pervasive it is was news to me. Trader Yan Ohayon explains that the exchanges are now more concerned with making money for their shareholders than in providing a level playing field.

 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 continue to look for a superior method of detecting bottom reversals but did not complete our research in time for this newsletter. We are looking at stochRSI combined with various volume indicators.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 12380 0.03% 6.93% Up
NASDAQ 2780.42 -0.33% 4.81% Up
S&P 500 1328.17 -0.32% 5.61% Up
Russell 2000 840.89 -0.69% 7.3% Up
Wilshire 5000 14054.7 -0.4% 5.75% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
0.03 %
Russell 2000
6.73 %
Russell 2000
21.2 %
Russell 2000
7.3 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Long-Term Care Facilities Long-Term Care Facilities Silver Silver
 Most Improved Industry (by change in technical rank2)
+ 43
Foreign Utilities
+ 145
Home Improvement Stores
+ 168
Lumber - Wood Production
+ 164
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 14.15 6.78% 3.48%
Last Week 16 14.38 5.11% 0.87%
13 Weeks 226 15.54 12.2%
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 MNTX Manitex International, Inc. 123
Top Technical SVVS SAVVIS, Inc. 35
Top Fundamental NFLX Netflix, Inc. 51
Top Tech. & Fund. CMG Chipotle Mexican Grill, Inc. 34
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 ZIOP ZIOPHARM Oncology Inc. 115
Top Technical LABL Multi-Color Corporation 60
Top Fundamental CAVM Cavium Networks, Inc. 43
Top Tech. & Fund. CAVM Cavium Networks, Inc. 43
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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