Weekly Newsletter 11/01/13
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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  

I apologize for the re-transmission , but some images were missing from the first version.

Our market trend indicators remain positive but some profit taking produced two distribution days for the NASDAQ Composite this week. The NASDAQ was the only major index to close down (0.5%). Although volume remained above the 50 day average each day, significantly these distribution days were not offset by any accumulation days. Our slope chart, which is a proxy for momentum clearly shows the index is moving into consolidation, so we can expect fewer breakouts as prices drift down. That trend is already apparent with only 8 modest breakouts this week.

NASDAQ Comp.
 New Features this Week Additional Value that we added this week

Keltner Channel and Squeeze indicator


Our Technical Analysis charts received two new indicators this week : Keltner Channels and a Squeeze indicator. The charts also now have the ability to show two channel overlays simultaneously. This allows the display of Bollinger Bands and Keltner Channels together from which the Squeeze indicator is derived.

A Keltner Channel is similar to a Bollinger Band but is less volatile. Like the BB, it is an indicator of oversold or overbought conditions, but in neither case are they automatic sell or buy signals when prices move outside the channel or band.

A Squeeze signal occurs when the more volatile BB moves inside the Keltner Channel and is a signal that a breakout from the Keltner Channel could soon occur. The Squeeze signal is usually used in conjunction with the Momentum indicator. The Momentum indicator gives the direction in which the breakout will occur. Our slope indicator when used with a period of 12 days is almost identical to the momentum indicator, but more graphical. The image to the left shows how you might use these indicators together, and below we show the resulting 6-month chart for AAPL.




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

More on the Squeeze Indicator


I just learned of this indicator this week and I'm looking forward to doing more research on it. If it can be combined with our other patterns, it may give another dimension to our ability to pick winning breakouts as they happen. In particular, it may enable us to pick winners while they are still low in their bases,

For example, FSLR was a recent strong breakout, from a classic CwH base. The squeeze indicator predicted the  upward move while it was low in its base and that move turned out to be a gain of over 50%.

fslr squeeze

I invite you to look at charts of other breakouts and stocks on our current watchlists using these indicatora and let me know if you find them useful.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 15615.5 0.29% 19.16% Up
NASDAQ 3922.04 -0.54% 29.89% Up
S&P 500 1761.64 0.11% 23.52% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
0.29 %
NASDAQ Composite
6.3 %
NASDAQ Composite
16.08 %
NASDAQ Composite
29.89 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Toy & Hobby Stores Publishing - Newspapers Toy & Hobby Stores Toy & Hobby Stores
 Most Improved Industry (by change in technical rank2)
Specialty Eateries
+ 75
Basic Materials Wholesale
+ 81
Photographic Equipment & Supplies
+ 198
Industrial Electrical Equipment
+ 145
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 8 9.77 8.12% 5.32%
Last Week 6 10.23 12.02% 6.71%
13 Weeks 126 10.85 18.8%
5.68%
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. 101
Top Technical PZZI Pizza Inn, Inc. 101
Top Fundamental BNCN BNC Bancorp 59
Top Tech. & Fund. EVC Entravision Communication 92
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 FLO Flowers Foods, Inc. 44
Top Technical X United States Steel Corporation 28
Top Fundamental FLO Flowers Foods, Inc. 44
Top Tech. & Fund. FLO Flowers Foods, Inc. 44
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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