Weekly Newsletter 11/03/12
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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 Chart

Our NASDAQ Composite trend indicator turned upwards on Thursday as the index recorded an accumulation day. The turn upwards came as the index continued to find support intraday at the 200 dma level while closing higher on Monday, Tuesday and Thursday. Our trend indicators for the S&P 500 and DJI remain negative. The NASDAQ is the more volatile index and the trend indicator is tuned to that volatility so it is typical that the NASDAQ indicator would turn before the other two.

It is difficult to assess the meaning of Friday's reversal which left the index in negative territory for the week. It could be due to profit taking, a potential hit to economic growth due to Hurricane Sandy's devastation or a reaction to the increase in the unemployment rate, In any case, one day's results do not make a statistic or identify a trend, so we prefer to believe that the trend is now upwards and the number of successful breakouts will increase, until there is more evidence to the contrary.

Note that although the number of successful breakouts fell this week compared to last week, the net return was a positive 2.6%.

 New Features this Week Additional Value that we added this week

No new features this week. If you haven't yet done so, take a look at our free facebook app. We are working on adapting this to mobile platforms.

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

How to Use the Stock Timeliness Checkup Tool

Now that the NASDAQ trend has turned upwards, how can we use that to determine which breakouts we should invest in?

Lets consider two stocks that are ranked highest on our cup-with-handle watchlist now, OMG and KTCC. Note that KTCC is a pure technology stock (computer peripherals) while OMG is purely retail.

If we run the Stock Timeliness Tool over the last five years (which gives us a sample of bear and bull markets) we see that if we bought and sold (went long) OMG based on the NASDAQ trend indicator, we would have gained a return of 58% . In contrast, if we used the indicator to trade KTCC then we would have gained 212%.

This tells us that if we get a breakout alert on KTCC and OMG in the next day or so, we would probably be better served to invest in KTCC as it has historically made better gains when the NASDAQ has been in an uptrend.

The results of running the Stock Timeliness Checkup tool on each stock is shown in these two tables. You can see the details of the analysis by running the tool for yourself which is found under Evaluate > Analytical Tools.



 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 13093.2 -0.11% 7.17% Down
NASDAQ 2982.13 -0.19% 14.47% Up
S&P 500 1414.2 0.16% 12.45% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
S&P 500
0.16 %
Russell 2000
1.67 %
S&P 500
3.29 %
NASDAQ Composite
14.47 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Lumber - Wood Production Lumber - Wood Production Air Services - Other Lumber - Wood Production
 Most Improved Industry (by change in technical rank2)
Music & Video Stores
+ 43
Music & Video Stores
+ 83
+ 147
Foreign Money Center Banks
+ 156
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 24 20 5.26% 2.64%
Last Week 35 19 1.5% -0.3%
13 Weeks 304 20.85 9.02%
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 HL Hecla Mining Company 97
Top Technical HL Hecla Mining Company 97
Top Fundamental TLLP Tesoro Logistics LP 45
Top Tech. & Fund. MGAM Multimedia Games Holding Company Inc 57
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 UNXL Uni-Pixel Inc(NDA) 85
Top Technical UNXL Uni-Pixel Inc(NDA) 85
Top Fundamental DXPE DXP Enterprises, Inc. 52
Top Tech. & Fund. TRS TriMas Corp 54
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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