Weekly Newsletter 05/18/12
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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  
NASDAQ Equivolume


Our market trend signal for the NASDAQ, which had been a hold-out while the other signals turned negative a while ago, finally succumed in the face of Tuesday's distribution day, which also coincided with the index breaking through the 2900 support level. The index now looks as though it will test the 200 day moving average at 2740 unless the G8 meeting this weekend produces a miracle cure for the European debt crisis. With Greece facing a second round of elections, that does not seem likely. Also, the domestic economic trend is not too encouraging with a surprising fall in the Philadelphia manufacturing index and a rise in unemployment claims, although this may be due to people re-entering the workforce - a sign of optimism that the job availability is improving.

Friday's spike in volume was likely due to the Facebook IPO but the underlying trend of consecutive distribution days is a signal to stay out of the market or go short until the trend reverses.
 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

Breakoutwatch Short Candidates and Short ETF's

We do not send breakdown alerts by default, so if you would like to make money on the short side, you may wish to activate our breakdown alert service. To do so, see http://www.breakoutwatch.com/newsletter/archive/2011-09-10.php#6.

When you take a long position, the most you can lose is 100% of your investment if the price goes to zero. When shorting a stock, however, your risk is potentially infinite because there is no limit to the potential price move against you. This, among other factors, makes shorting a very risky game.

Investing in a short ETF, however, allows you to bet against the market, while limiting your loss in the same way that going long does. That's because the value of the short ETF can never fall below zero. While 'shorting' the market with these ETF's you are in fact taking a long position.

For example, to take advantage of the fall in the NASDAQ, one could have gone 'long' in QID


 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 12369.4 -3.52% 1.24% Down
NASDAQ 2778.79 -5.28% 6.67% Down
S&P 500 1295.22 -4.3% 2.99% Down
Russell 2000 747.21 -5.42% 0.85% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
-3.52 %
Dow Jones
-5.86 %
NASDAQ Composite
8.02 %
NASDAQ Composite
6.67 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Medical Practitioners Medical Practitioners Home Improvement Stores Personal Computers
 Most Improved Industry (by change in technical rank2)
Dairy Products
+ 95
Dairy Products
+ 132
Dairy Products
+ 163
Photographic Equipment & Supplies
+ 161
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 3 14.77 1.55% -3.92%
Last Week 37 17.23 -0.46% -4.75%
13 Weeks 237 17.54 8.27%
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 KBALB Kimball International 91
Top Technical KBALB Kimball International 91
Top Fundamental BWLD Buffalo Wild Wings 45
Top Tech. & Fund. LOPE Grand Canyon Education Inc 53
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 CORE Core-Mark Holding Company, Inc. 41
Top Technical CORE Core-Mark Holding Company, Inc. 41
Top Fundamental CORE Core-Mark Holding Company, Inc. 41
Top Tech. & Fund. CORE Core-Mark Holding Company, Inc. 41
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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