The NASDAQ Composite was the only major index to gain ground this week and it closed above the psychologically resistant level of 4,000. There have been concerns that markets are overvalued but Friday's employment numbers pleased the markets and all three major indexes closed higher. This came as a bit of a surprise to me as I expected the indexes to fall as improving employment means the Fed is closer to  ending QE. Perhaps the markets are endorsing Barry Ritholz' argument that we are not in a bubble:

"Squeeze" Added to real Time Alerts.

If a stock on which we issue an alert is in a squeeze, then this will now be shown on each real time alert. You can set your watchlist filters to receive alerts only stocks in a squeeze on each watchlist.  For more information on how to do this see New Features in our November 9 newsletter . Also, see below as we have changed the definition of a squeeze for cup-with-handle patterns.

Change to Squeeze Definition for CwH Patterns

I have continued my research on how a squeeze may help us identify breakout stocks. After using several statistical techniques to look for the most significant factor in determining if a CwH stock will close above its breakout price on the day of an alert going back to January1,2008 (to include the crash), I found the most significant factor was a combination of squeeze, positive momentum and positive momentum slope. Accordingly, for CwH stocks I've set the squeeze flag to be 'y' if the squeeze is present and both momentum and momentum slope is positive.

Over that time frame, there would have been 2348 alerts with a squeeze present on the day before the alert and with positive momentum and slope. Of those, 1577, or 67%, closed above their breakout price.

Note that I am not saying that these will reach the volume levels necessary for a "confirmed" breakout, but it does represent an opportunity to make a short term profit. This may be of particular interest to options traders.