Weekly Newsletter 12/09/12
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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  

The NASDAQ composite is hitting resistance at the 50 day level. If this continues we will soon see the 50 day average cross below the 200 day average which will be a bearish signal. For now, our market trend indicator continues to say the trend is up, but the indicator is just an imperfect guide, not an oracle (more below). The markets seem to be watching the 'fiscal cliff' negotiations but Barry Ritholz believes this is not all that is going on and the uncertain direction can also be explained by weak corporate profits, adjustment to an over bought condition, failed market expectations of a Romney victory. Read his comments here.

Fiscal cliff or fiscal slope or not,  the markets may also be factoring in the very real prospect of a recession in 2013 because even if the cliff/slope is avoided, public sector (Federal and State) expenditure will be reduced in 2013. The ECRI believes we are already in recession. see The Tell Tale Chart

You will see in our tables below that breakouts were few this week and rarely profitable. I suggest a great deal of caution despite our optimistic trend indicator..


You may have noticed that the newsletter is being posted later recently. This is because while we are in Australia we are almost a day ahead of  East Coast time. The result is that the Friday market close actually happens on Saturday for us and weekend family commitments often mean I don't get to work on the newsletter until our Monday, Sunday for you.

 New Features this Week Additional Value that we added this week

The Zack's watchlist daily refresh is now functioning again after a brief hiccup

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

For the past three weeks we have reported that we are working on fine tuning our market trend indicators. We initially thought we had succeeded in making a substantial improvement when looking at recent market trends but when we did sensitivity testing over longer time frames, and with different starting and ending dates, we did not find a statistically significant improvement, so our current trend indicators will remain in place.

We are always looking to improve our algorithms and we may find a better solution in the future.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 13155.1 0.99% 7.67% Up
NASDAQ 2978.04 -1.07% 14.31% Up
S&P 500 1418.07 0.13% 12.76% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
0.99 %
Dow Jones
-1.38 %
S&P 500
6.97 %
NASDAQ Composite
14.31 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Lumber - Wood Production Lumber - Wood Production Lumber - Wood Production Lumber - Wood Production
 Most Improved Industry (by change in technical rank2)
Drugs Wholesale
+ 52
Machine Tools & Accessories
+ 58
Music & Video Stores
+ 152
Foreign Money Center Banks
+ 170
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 6 17.62 0.8% -0.68%
Last Week 20 20.08 3.57% 0.12%
13 Weeks 309 20.54 5.54%
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 RGEN Repligen Corporation 104
Top Technical RGEN Repligen Corporation 104
Top Fundamental PRXL PAREXEL International Corporation 37
Top Tech. & Fund. RAX Rackspace Hosting, Inc. 33
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 DSW DSW Inc. 42
Top Technical THD iShares MSCI Thailand Index Fund 11
Top Fundamental ABAX Abaxis Inc 33
Top Tech. & Fund. ABAX Abaxis Inc 33
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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