Weekly Newsletter 10/21/11
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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 is struggling to hold above the 2600 level. While it broke out above that level at the end of last week and stayed above it for the earlier part of this week, it found resistance at that level on Thursday but then overcame it on Friday. Where we go from here is very much dependent on what happens in Europe where there are daily mood swings as leaders seem unable to get their act together. Meetings between France and Germany this weekend are a precursor to a summit next Wednesday which was postponed from this weekend. The markets have risen in the hopes of a resolution but this could well be a case of 'buy the rumor sell the news' as the difficulty of getting 17 sovereign countries to agree on a common financial solution is likely to produce a camel rather than a horse.

NASDAQ Composite

Volume rose each day this week providing three distribution days and two accumulation days. Those who are short the market are nervous and Friday was likely the result of a short squeeze a.k.a a bear market rally as the shorts hedged their positions before the weekend meetings.

The number of confirmed breakouts jumped to 17 this week but gains were mostly modest. I recommend caution until the outcome of the European summit is known.

 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

This feature will return in two weeks.  We are still working on our trend reversal system for individual stocks and next week will be traveling so the newsletter will be briefer.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 11808.8 1.41% 2% Down
NASDAQ 2637.46 -1.14% -0.58% Up
S&P 500 1238.25 1.12% -1.54% Up
Russell 2000 712.42 -0.01% -9.09% Down
Wilshire 5000 12908.9 0.98% -2.87% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
1.41 %
Dow Jones
-6.88 %
Dow Jones
-5.38 %
Dow Jones
2 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Personal Computers Personal Computers Personal Computers Personal Computers
 Most Improved Industry (by change in technical rank2)
Specialized Health Services
+ 44
Printed Circuit Boards
+ 82
Electronics Stores
+ 129
Drug Related Products
+ 183
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 17 9.62 17.01% 2.09%
Last Week 4 11.15 1.93% 0.66%
13 Weeks 233 11.92 7.38%
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 CRDB Crawford and Company
Top Technical CONN Conns Inc.
Top Fundamental CELL Brightpoint Inc.
Top Tech. & Fund. CELL Brightpoint Inc. 67
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 WPP Wausau Paper Corp.  92
Top Technical CBST Cubist Pharmaceuticals, Inc.  48
Top Fundamental OPNT Opnet Technologies inc.
Top Tech. & Fund. OPNT Opnet Technologies inc. 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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