|Weekly Newsletter 02/17/13|
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This newsletter summarizes the breakout events of the week
and provides additional guidance that does not fit into our
daily format. It is published each weekend.
|Prior editions of this newsletter with our valuable Tips of the Week are available here.|
The NASDAQ Composite is testing resistance at 3195. The index closed just 3 points below that level on Friday, and seems to have stalled with its first weekly loss of the year. It increasingly looks as though sequestration will go into effect, which economists estimate will halve the GDP growth rate. While the connection between the markets and GDP is a tenuous one, the risk must be more to the downside than the upside.
While the number of breakouts continues to be below the thirteen week average, they continue to perform quite well with an average gain for the week of 3%.
|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|
Recommended Buy Criteria - Buy at Open
Last week we ran a simulation of the CwH Backtest tool to seek the most profitable buy criteria since June, 2012 using the Buy on Alert strategy. This week we repeat the exercise for the Buy at Open strategy. The buy at open strategy is for those who cannot react to intra-day alerts and instead do their trading at the next open based on the breakouts that occurred during the day. This generally means placing an overnight order that will be executed the next day.
The simulation was done for 4 positions (meaning that 1/4 of available cash was used for each buy) using all combinations of criteria in the following ranges:
The criteria that gave the best results were quite similar to those obtained for the buy on alert strategy. The only exception was that the industry selection filter was more restrictive by requiring that the industry be in the top 27% of industry rankings.
The 4 position strategy since June 1, 2012 provided a
31.2% gain - slightly less than the 46% gain obtained
with the buy on alert strategy but still better than the
19% gain in the S&P 500 over the same period.
One Last Caveat
These results were obtained by optimizing the selection criteria over historical data. While the period of the backtest was representative of recent market conditions, the exact sequence of trades represented will never be repeated and so future results using these criteria, could be better or worse.
|Market Summary||Overview of market direction and industry rotation|
|Weekly Breakout Report||How confirmed breakouts performed this week|
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|
|Top Second Chances||Stocks that broke out this week and are still in buyable range|
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