Weekly Newsletter 02/24/12
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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  

This week we look at the candlestick chart pattern for the NASDAQ Composite for the last month. The chart is characterized by a large number of 'doji' candlesticks, 6 in the last 11 sessions. Doji patterns occur when the bulls and bears are almost in balance and indicate uncertainty about the future direction of the market. This uncertainty is hardly surprising considering the length and strength of the current rally and domestic and geopolitical considerations. The index has gained almost 18% since its short term bottom on December 19 and the rate of increase has started to flatten as traders question how long the rally can last. Pushing the index higher though is the improving domestic economy, which is sure to produce more investment in technology as industry replaces aging equipment, but this is offset by increasing concern over rising oil prices and the potential for major supply reductions if the cold war with Iran turns hotter. On balance, the bulls are winning even if only by a little (see Friday's result) and the trend remains to move higher.

NASDAQ Composite
 New Features this Week Additional Value that we added this week

We have replaced our standard chart display with our newer technical analysis display. This was always available from a link from the standard charts but it is now the default display.

Now, when you enter a symbol into the BoWChart box in the page header you will automatically receive the T/A chart format. This is true for all the other chart links that used the old format as well.

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

Candlestick Chart Patterns

Why do we prefer candlestick charts to the more common open, high, low, close charts? The answer is that although both chart styles convey the same information, we find the candlestick chart more visually appealing. To our eye, the candlestic chart gives a more quickly understood representation of the day's price action. We also apply the use of color to illustrate a higher (blue) or lower (red) close, whereas teh traditional ohlc chart is a monotone black.

The origin of candlestick chart patterns goes back to Chinese rice trading in the 17th century and you can read an excellent summary of the major patterns at this Introduction to Candlestick Charts.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 12983 0.26% 6.26% Down
NASDAQ 2963.75 0.41% 13.77% Up
S&P 500 1365.74 0.33% 8.6% Up
Russell 2000 826.92 -0.21% 11.61% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
0.41 %
Russell 2000
24.13 %
Russell 2000
19.53 %
NASDAQ Composite
13.77 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Personal Computers Personal Computers Toy & Hobby Stores Personal Computers
 Most Improved Industry (by change in technical rank2)
Technical Services
+ 50
Medical Practitioners
+ 73
+ 168
Residential Construction
+ 209
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 20 27 5.72% 4.01%
Last Week 37 26.38 6.39% 2.03%
13 Weeks 362 27.85 12.91%
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 IDSY I.D. Systems, Inc.  120
Top Technical MNTX Manitex International, Inc.  108
Top Fundamental GOLD Randgold Resources Ltd. (ADR)
Top Tech. & Fund. GOLD Randgold Resources Ltd. (ADR)
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 FSM Fortuna Silver Mines Inc Ordinary Shares (Canada)& 117
Top Technical MPWR Monolithic Power Systems, Inc.  65
Top Fundamental TAL TAL International Group, Inc.
Top Tech. & Fund. TAL TAL International Group, Inc.
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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