|Weekly Newsletter 11/08/13|
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The NASDAQ Composite continues in consolidation mode with a slight downward bias but nothing to be alarmed about. The S&P 500 is also consolidating while the DJI is moving slowly higher. Our market trend signals all remain positive.
The number of breakouts rose to 12 this week with a health average gain of 4.2% by Friday's close. CUNE was the standout with a gain of 24% followed by NTLS, up 13%. It's only fair to mention the disappointments as well and CSUN closed 15 off its breakout price after surging to an intraday high of 15%.
|New Features this Week||Additional Value that we added this week|
More Squeeze Enhancements
The Squeeze indicator has now been consolidated with momentum to provide a single chart. The image below shows GTN, a current entry on our CwH watchlist.
1. Squeeze Chart
A squeeze occurs when the Bollinger Band is completely enclosed within the Keltner channel, and this is indicated on the lower chart by black bars on the horizontal axis. You will notice that the squeeze is on currently in the handle for three days. The squeeze also occurred three times earlier in the six-month period shown and was each time followed by a healthy rise.
The squeeze indicators are overlayed on a normalized momentum chart. That is to say, that instead of using absolute momentum, momentum values are normalized within the range +/- 1. Positive momentum is represented by blue bars and negative momentum by red bars. A lighter shade of each shows a slight diminution in the momentum direction.
Charts with the squeeze indicator are presently only available from the BoWchart option in the top right hand side of the header., they are not currently available directly from a watchlist, although that will be added soon.
2. Squeeze Indicator on Watchlists
Watchlist stocks that are currently in a squeeze are now shown on each watchlist and the list can also be filtered to show only stocks that are in a squeeze. NB. Alerts can not yet be filtered for the squeeze indicator. The value of this is still to be determined.
3. Squeeze Filter Added to CwH Backtest
You can now do a CwH backtest using the squeeze filter but the filter has only been added to backtest data to the start of 2013.
|This Week's Top Tip||Tips for getting the most out of our site|
While the value of the squeeze is still to be determined, it is useful at this stage to define how the squeeze could be used to select long or short candidates.
Despite these limitations, the results are encouraging:
For an example of how these results could be improved by filtering, I ran the same study by select stocks with an RS rank >= 92. Again, there was no filtering by price or volume.
These results show that further investigation is warranted to find the optimum combination of price, volume, fundamentals and technicals. I envisage a new watchlist of squeeze breakout candidates wil emerge from this work.
|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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