Weekly Newsletter 03/02/12
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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  


Please read this week's Top Tip as it has important implications for real time traders


The NASDAQ Composite is showing early signs of entering a bearish descending triangle pattern. It is too early to confirm this, but the warning signs are there. Last week, we drew attention to the almost equal balance between bulls and bears as represented by the predominance of doji candlestick patterns, and although the index did move higher on Tuesday, Wednesday's heavy distribution day was a shot across the bows for the bulls.  Note also, that the Bollinger Bands are tightening indicating the price movements are narrowing. With oil prices rising and the mounting tension over Iran, particularly now the President has made a strong statement that almost certainly locks him into military action if sanctions fail to produce a climb-down by Iran (very unlikely), the positive aspects of an improving economy are likely to be outweighed by the mounting uncertainty.

NASDQ Composite
 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

Important Information about Real Time Alerts

When the NASDAQ changed its rules about the distribution of real time trade information, which coincided with a steep drop-off in subscriptions after the market crash, we had to find another source of real time data and built a feed based on Google's price data, which is supposedly real-time, while their volume data is at least 15 minutes delayed. Consequently, we started issuing alerts when the breakout price (BoP) was reached and dropped the previous requirement that projected volume be at least 1.5 times average daly volume (ADV). In theory, that should have meant that alerts were issued earlier in the session as we were not waiting for the volume condition to be met.

Recently, a subscriber wished to do an analyis of the times when breakout alerts are issued which are then confirmed at the end of the session (meaning that their price met or exceeded the BoP). The results were surprising because they indicate that some of the real time data subsequent to 10/29/2010 were actually significantly delayed.

The next two charts compare the times of breakout alerts, which were subsequently confirmed, before and after 10/29/2010. You can see that in the second chart, a large number of alerts (48%) were actually received after 4pm (16:00). While we would expect some reporting delays, this is excessive and indicates that we were not receiving real time data. Note also that although trading is heavily concentrated at the start and end of the day, before 10/29/2010 there is a shift of alerts into the 10:00 - 11:00 time frame which is consistent with what we would expect if there was a delay while the necessary ADV requirment was met. Note also that very few alerts were issued after 4pm which is consistent with what we would expect for real-time data.

Quite frankly, this is embarrassing, but must be disclosed because the integrity of our data is so important to us. I am also grateful to the subscriber who prompted the analysis and brought this to light.

Over the weekend I will be setting up a new data feed. As you may know there are now many exchanges outside of the NASDAQ, NYSE and AMEX on which trading takes place, but where prices (but not volume) closely mirror those of the major exchanges. We will now move to a feed from the BATS exchange and at the end of the week we'll review the alert profiles again.

alerts profile before 10/29/2010

alerts profile after 10/29/2010

 
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 12977.6 -0.04% 6.22% Down
NASDAQ 2976.19 0.42% 14.24% Up
S&P 500 1369.63 0.28% 8.91% Up
Russell 2000 802.42 -2.96% 8.3% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
0.42 %
NASDAQ Composite
13.3 %
NASDAQ Composite
19.99 %
NASDAQ Composite
14.24 %
 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)
Closed-End Fund - Equity
+ 63
Department Stores
+ 92
Major Airlines
+ 151
Residential Construction
+ 197
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 19 25.69 5.43% 0.04%
Last Week 21 27 8.75% 2.95%
13 Weeks 329 28.77 11.7%
3.96%
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
Category
Symbol
Company Name
Expected Gain1
Best Overall SMBL Smart Balance Inc 123
Top Technical SVVC Firsthand Technology Value Fund, Inc. 55
Top Fundamental GOLD Randgold Resources Limited 33
Top Tech. & Fund. CERN Cerner Corporation 38
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
Category
Symbol
Company Name
Expected Gain1
Best Overall NQ NetQin Mobile Inc. 108
Top Technical CQP Cheniere Energy Partners, LP 48
Top Fundamental TRS TriMas Corporation 55
Top Tech. & Fund. TRS TriMas Corporation 55
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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