Weekly Newsletter 09/09/11
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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 European situation is worsening as Greece gets closer to defaulting on its sovereign debt. It now seems inevitable that Greece will not be able to stick to its budget-cutting targets and Germany is threatening to withhold further aid unless Greece meets the terms of its austerity package.  The likely effects of a Greek default are not well understood but will certainly lead to a further fall in the markets as Financial stocks are hit and in the worst case could lead to Lehman Brothers like situation where overnight repo markets freeze-up.

The European situation certainly contributed to the end-of-week sell-off but it is also possible that news of a "credible threat" to New York and/or Washington unnerved the markets. With the ten-year anniversary of 9/11 falling on Sunday, an attack over the weekend would certainly cause panic selling on Monday so some traders may have limited their exposure, just in case.

The NASDAQ Composite has fared slightly better than the other major indexes, losing just 0.5% for the week, but the trend is downwards and likely to continue so until support is tested at 2330. A surge above resistance at 2600 would reverse the trend but that seems unlikely until the outcome of a Greek default is known. Adding to the uncertainty is the likelihood that Obama's jobs initiative will be stalled until the debt-commission announces its findings by Thanksgiving.

NASDAQ Composite

There were a meager five breakouts this week compared to fourteen breakdowns. The breakouts could barely manage a 1% gain for the week while the average gain from breakdowns by Friday was over 9%.

Date Symbol Base* B'down Price Friday Close Gain % at
Friday Close
9/9/2011 COV SS 49.71 47.72 4.20%
9/9/2011 FXE FB 138.23 136.09 1.60%
9/9/2011 PQ HS 7.39 7.28 1.50%
9/9/2011 AUQ SS 12.35 11.7 5.60%
9/9/2011 NG SS 9.51 9.16 3.80%
9/8/2011 FXE FB 139.02 136.09 2.20%
9/8/2011 ELN HS 9.93 9.59 3.50%
9/6/2011 SFN HS 13.26 9.59 38.30%
9/2/2011 NWSA HS 16.75 16.03 4.50%
9/2/2011 SQM HS 63.62 58.59 8.60%
9/2/2011 PQ HS 7.39 7.28 1.50%
9/2/2011 HRB SS 14.87 13.13 13.30%
9/1/2011 VPHM HS 19.71 18.2 8.30%
9/1/2011 VRUS HS 102.57 74.39 37.90%
Average gain at Friday's Close
SS: 50 day breakdown
FB: Flat Base
HS: Head and Shoulders Top

 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

How to Receive Breakdown Alerts

By default, we do not send breakdown alerts as the primary purpose of our site has been to identify potentially profitable long positions and many individually directed investors are uncomfortable with going short.

This article makes the case that We Are in a Secular Bear Market that began 11 years ago. It views the bull market that began in April 2009 as 'cyclical' and that we have now returned to the prevailing bearish trend. It makes the case that with households deleveraging, which will continue until the housing market has bottomed, "we expect U.S. stocks to stay in the secular bear market that started in 2000 for many years to come."

If this is true, and the case for it is very strong, there will be more opportunities to make profits on the short side than on the long, as this weeks comparison of breakout to breakdown performance shows.

Should you wish to receive breakdown alerts then you need to go to menu choice Support > Account Management > Update Account and check the "send Breakdown Alerts" box.

account management

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 10992.1 -2.21% -5.06% Up
NASDAQ 2467.99 -0.5% -6.97% Down
S&P 500 1154.23 -1.68% -8.22% Down
Russell 2000 673.96 -1.38% -14% Down
Wilshire 5000 12091.3 -1.57% -9.02% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
-0.5 %
NASDAQ Composite
-8.03 %
Dow Jones
-8.74 %
Dow Jones
-5.06 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks

Personal Computers Personal Computers Cigarettes
 Most Improved Industry (by change in technical rank2)
Toys & Games
+ 38
+ 61
Drug Related Products
+ 153
Closed-End Fund - Debt
+ 180
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 5 11.62 4.27% 1%
Last Week 9 11.54 9% 4.17%
13 Weeks 258 12.08 5.84%
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 GNMK GenMark Diagnostics, Inc   110
Top Technical RLRN Renaissance Learning, Inc.   53
Top Fundamental SWI SolarWinds, Inc.   52
Top Tech. & Fund. SWI SolarWinds, Inc.   52
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 INSP InfoSpace, Inc.   70
Top Technical MFN Minefinders Corp. Ltd. (USA)   70
Top Fundamental INSP InfoSpace, Inc.   70
Top Tech. & Fund. MFN Minefinders Corp. Ltd. (USA)   70
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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