Weekly Newsletter 09/06/13
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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  

The NASDAQ Composite recovered this week with volume trending higher as summer comes to an end. Volume exceeded the 50 day average on Wednesday and Friday and this should soon lead to a reversal of our trend indicators that currently remain negative.

NASDAQ Comp.

The uptick in volume allowed several strong breakouts and there was an overall average gain of 6% by the week's end. As usual, cup-with-handle breakouts were the strongest, but a couple of High Tight Flag breakouts scored particularly well also.

B'out Date Symbol Base B'Out Price Last Close Current % off BOP *Gain at
Intraday High
9/4/2013 ASTX CwH 6.87 8.73 27.07% 27.07%
9/4/2013 SBLK CwH 8.63 10.16 17.73% 17.73%
9/4/2013 AMBI HTF 14.21 15.15 6.62% 11.68%
9/3/2013 VRTU DB 26.42 29 9.77% 9.77%
9/4/2013 GDP HTF 23.16 24.93 7.64% 7.64%
9/4/2013 MZOR CwH 15.56 15.44 −0.77% 3.79%
9/6/2013 CTRN CwH 17 17.31 1.82% 1.82%
9/6/2013 GNTX DB 24.49 24.93 1.80% 1.80%
9/3/2013 SFD CwH 33.65 33.92 0.80% 0.92%
9/3/2013 NGVC CwH 38.68 36.04 −6.83% 0.72%
9/4/2013 ORA CwH 25.82 25.98 0.62% 0.62%
 New Features this Week Additional Value that we added this week
New Support Forum

Now that I am more settled after the return from Australia, I found the time to install a new support forum. You will recall that I had to remove the old one due to a spammer getting access. To increase security on the new one,  you will have to sign in with your breakoutwatch username and password before you will be able to post a question. Regrettably, I was not able to copy over the old forum but will add the more important posts in the coming week.
This Week's Top Tip Tips for getting the most out of our site

Using RS Rank 92 as a Buy Signal

At the suggestion of a subscriber, I have been analyzing a strategy that buys when a stock first gains an RS Rank of 92, has a positive trend, determined from our Trend Reversal Signals (TRS),  and a slope that is also trending up. The strategy sells when the TRS next turns down.

The analysis was performed over the last year,  which has been generally bullish. The analysis looked at every stock that attained an RS of 92 but had a lower RS on the previous day. The strategy buys the stock at the open of the following day provided the TRS is positive and the slope is trending up. The stock is sold at the open on the day immediately following the TRS turning negative, regardless of the slope trend. If a stock was sold but again qualified later for the buy conditions , then it was  re-bought and sold. 

I used the default values for the TRS parameters but varied the slope "window" from 5 days to 89 days using the Fibonacci series, 5, 8, 13, 21, 34, 55, 89.

Slope Period
# Cases
Winners
Losers
Avg. Profit
5
2826
1169
1657
1.15%
8
2823
1106
1717
0.46%
13
2768
1112
1112
0.26%
21
2880
1206
1674
1.29%
34
3162
1355
1807
1.93%
55
3372
1346
2026
0.81%
89
3756
1514
2242
1.03%

Conclusion

While the strategy makes small profits these are likely to be negated by brokers' fees and other causes of slippage.

The RS Rank level of 92 has been found to give the best possibility of higher returns from Cup-with-Handle breakouts, but there's no reason that that level should be the most important level when determining a buy signal. other than for  cwh stocks.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 14922.5 0.76% 13.88% Down
NASDAQ 3660.01 1.95% 21.21% Down
S&P 500 1655.17 1.36% 16.06% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
1.95 %
NASDAQ Composite
5.5 %
NASDAQ Composite
12.81 %
NASDAQ Composite
21.21 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Toy & Hobby Stores Toy & Hobby Stores Music & Video Stores Toy & Hobby Stores
 Most Improved Industry (by change in technical rank2)
Shipping
+ 34
Shipping
+ 68
Medical Practitioners
+ 202
Medical Practitioners
+ 204
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 11 8.08 10.32% 6.02%
Last Week 2 8.46 11.51% -3.63%
13 Weeks 100 9.15 18.27%
8.83%
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 PZZI Pizza Inn, Inc. 108
Top Technical PZZI Pizza Inn, Inc. 108
Top Fundamental AMWD American Woodmark Corporation 41
Top Tech. & Fund. LGND Ligand Pharmaceuticals Inc. 56
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 MZOR Mazor Robotics Ltd. - American Depositary Shares 75
Top Technical CTRN Citi Trends, Inc. 49
Top Fundamental NGVC Natural Grocers by Vitamin Cottage Inc 61
Top Tech. & Fund. NGVC Natural Grocers by Vitamin Cottage Inc 61
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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