Weekly Newsletter 11/22/13
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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  

As a reminder to new subscribers, we follow the NASDAQ Composite Index each week because historically we have found most breakouts come from stocks listed on the NASDAQ exchange. The index is still moving higher although its momentum is slowing compared to the larger cap indexes. You will see from the chart that the index is in a "squeeze", showing that volatility has fallen and the trend is mainly sideways. From a squeeze, there can be a breakout either to the upside or downside so caution is indicated. the FOMC minutes released this week indicate that the Fed's QE policies will continue, at least until unemployment falls to 6.5%, so the probability is that the trend will strengthen again to the upside.


The star breakout of the week was Universal Insurance Holdings (UVE) which broke out of a cup-with-handle pattern on Thursday and gained over 16% intraday. It closed Friday with a 14% gain. More on this below.
 New Features this Week Additional Value that we added this week

Alpha Test of New Mobile App

I am working on a new mobile friendly version of the site. I invite you to point your mobile device to http://www.breakoutwatch.com/mobile/jqTest.php. Please let me know how it works for you and the device you used.
This Week's Top Tip Tips for getting the most out of our site

More on Handle Squeezes

Last week I suggested that cup-with-handle alerts issued when a stock is, or has been, in a squeeze in the handle were highly reliable. If you took this advice, then you would have made a handy gain on UVE as mentioned above. On the chart below, you will see three black bars just before Thursday's breakout, indicating that the stock was in a squeeze. The blue and red bars show the momentum strength. Notice that just before the breakout, the momentum was positive and increasing.


Despite this positive outcome for the squeeze indicator, I must back away from the advice given last week. That was based on performance this year but it has not stood up to examination over a period going back to January 2008. An alert when a squeeze is in play is not as reliable as I thought and should be used with caution. That said, I am still interested in the possibilities of using the squeeze indicator and research will continue.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 16064.8 0.65% 22.59% Up
NASDAQ 3991.65 0.14% 32.2% Up
S&P 500 1804.76 0.37% 26.54% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
0.65 %
NASDAQ Composite
9.13 %
NASDAQ Composite
15.39 %
NASDAQ Composite
32.2 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Toy & Hobby Stores Toy & Hobby Stores Toy & Hobby Stores Toy & Hobby Stores
 Most Improved Industry (by change in technical rank2)
Medical Practitioners
+ 53
Medical Practitioners
+ 193
Wholesale - Other
+ 196
Medical Practitioners
+ 203
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 9 11 5.77% 4.45%
Last Week 13 10.77 9.37% 4.92%
13 Weeks 143 11.46 19.32%
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
Company Name
Expected Gain1
Best Overall PZZI Pizza Inn, Inc. 106
Top Technical PZZI Pizza Inn, Inc. 106
Top Fundamental PAG Penske Automotive Group, Inc. 37
Top Tech. & Fund. PAG Penske Automotive Group, Inc. 37
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
Company Name
Expected Gain1
Best Overall FLML Flamel Technologies S.A. (ADR) 91
Top Technical FNGN Financial Engines Inc 49
Top Fundamental FNGN Financial Engines Inc 49
Top Tech. & Fund. FNGN Financial Engines Inc 49
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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