Weekly Newsletter 05/05/13
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You are receiving this email because you are or were a BreakoutWatch.com subscriber, or have subscribed to our weekly newsletter. 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.
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  

Our trend signal for the NASDAQ Composite went briefly negative on Wednesday but Friday's gap up and higher close turned the indicator positive again. However, as the chart shows, the index is above its upper trend line so a consolidation in the next few days appears likely.

NASDAQ Composite

The number of confirmed breakouts jumped to 19 this week, well above the 13 week average. Renewable Energy Group Inc (REGI) was the stand out performer with a gain of 18.4% after breaking out from a cup-with-handle base on Thursday.

Note that our requirement for a confirmed breakout is that the stock must close above its breakout price on daily volume at least 1.5 times the 50 day average volume. A study performed this week using the CwH Backtest tool brings into question the volume requirement and we may adjust it in the near future. See below.
 New Features this Week Additional Value that we added this week

We introduced a new home page this week. http://www.breakoutwatch.com/home. If you have your username and password "remembered" by the site then you will not normally see it.

We have also dropped the the $9.95 signup fee for a trial in favor of a 30 day totally free trial of all the sites features.
This Week's Top Tip Tips for getting the most out of our site

New Strategy Suggestions

As regular readers know, we frequently run our CwH backtest tool over multiple simulations to determine which set of filters provide the best returns in current market conditions. We did so again this week and were surprised to find that requiring breakout day volume of at least 1.5 times ADV reduced returns and it was better to require only that volume reach the average daily volume level.

In addition we found that the previous suggestion that industry rank be in the top 40% was still valid but that a stop loss on breakout price of 5% and a subsequent trailing stop of 3% produced the best returns.

I have described the new suggested strategy in an email that goes to new subscribers. Newsletter readers can access the email contents at Breakoutwatch.com Suggested Strategy.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 14974 1.78% 14.27% Up
NASDAQ 3378.63 3.03% 11.89% Up
S&P 500 1614.42 2.03% 13.2% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
3.03 %
Dow Jones
6.88 %
Dow Jones
14.36 %
Dow Jones
14.27 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Music & Video Stores REIT - Healthcare Facilities Cement Cement
 Most Improved Industry (by change in technical rank2)
Security & Protection Services
+ 36
Home Furnishing Stores
+ 50
Toy & Hobby Stores
+ 183
Toy & Hobby Stores
+ 215
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 11.69 3.97% 2.98%
Last Week 12 11.77 11.09% 5.47%
13 Weeks 192 13.23 8.9%
2.47%
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 JKS JinkoSolar Holding Co., Ltd. 104
Top Technical JKS JinkoSolar Holding Co., Ltd. 104
Top Fundamental CLMT Calumet Specialty Products Partners, L.P 51
Top Tech. & Fund. CZZ Cosan Limited(USA) 52
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 CLIR CLEARSIGN COMBUSTION CORP 89
Top Technical CLIR CLEARSIGN COMBUSTION CORP 89
Top Fundamental EXP Eagle Materials, Inc. 40
Top Tech. & Fund. EXP Eagle Materials, Inc. 40
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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