Weekly Newsletter 05/09/14
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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  

The divergence in the markets continues with NASDAQ continuing to move down while the DJI and S&P 500 maintain their slight upward trend. In fact, the DJI made a new all-time high while the NASDAQ Composite looks as though it could soon test support at the 200 dma. This weakness in tech and small cap stocks compared to large cap stocks has prompted a revision of our suggested criteria for selecting cup-with-handle breakouts and our revised parameters are published in our Top Tip section below.

NASDAQ Comp.
 Weekly Breakout Report  

Although the number of breakouts remains depressed due to the weakness in the NASDAQ, there are nevertheless some nice short term profits to be made. Once again, one of our SqueezePlay stocks topped the weekly breakout report.

Breakouts for Week Beginning 05/05/14
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close Last Close Current % off BOP Gain at Intraday High
05/06/14 NLS SQZ Y 8.96 9.79 11.12 24.11 24.11
05/09/14 SPPI HSB N 6.68 7.30 7.3 9.28 9.28
05/08/14 TWIN CwH N 28.93 30.01 30.91 6.84 6.84
05/06/14 PSIX CwH N 85.88 86.46 74 -13.83 3.59
05/06/14 APC CwH N 101.05 102.73 100.58 -0.47 3.3
05/09/14 MW SQZ Y 49.62 50.77 50.77 2.32 2.32
05/07/14 CHK CwH Y 29.22 29.61 29.81 2.02 2.12
05/07/14 GPK CwH Y 10.45 10.57 10.41 -0.38 1.24
05/05/14 DOM CwH Y 7.62 7.67 7.51 -1.44 0.79
05/09/14 GPN SQZ Y 68.20 68.68 68.68 0.70 0.7
Weekly Average (10 breakouts) 2.92 5.43
 
 New Features this Week Additional Value that we added this week

No new features this week.
This Week's Top Tip Tips for getting the most out of our site

Since the start of 2014, we have seen the markets behave quite differently than in 2013. The NASDAQ has not performed well while the other two major indexes have at least kept their head above water. For some time I have suggested staying on the sidelines if our market trend indicator for the NASDAQ was pointing down. Today, I am reversing that position and suggest that, for the time being, you ignore the the NASDAQ trend and can take long positions as long as the DJI and S&P 500 trends are positive. Volatility in the markets has also increased this year and this leads me to suggest using a tighter trailing stop. The new suggested trading parameters for cup-with-handle breakouts are:
  • Minimum RS Rank: 90
  • Industry Rank: In top 50 percentile (ie. rank below 108)
  • Trailing stop: 6%
  • Breakout Volume: 150% of ADV
  • Sell at next open if price and volume below confirmation value: yes
  • Require Squeeze: no

These parameters have been set as the default in the cup-with-handle backtest. You can adjust them there if you wish to confirm  these suggestions.

The backtest shows these returns since January 1, 2014.

CWH strategy


 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 16583.3 0.43% 0.04% Up
NASDAQ 4071.87 -1.26% -2.51% Down
S&P 500 1878.48 -0.14% 1.63% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
0.43 %
Dow Jones
4.53 %
S&P 500
6.09 %
S&P 500
1.63 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Toy & Hobby Stores Toy & Hobby Stores Medical Practitioners Toy & Hobby Stores
 Most Improved Industry (by change in technical rank2)
Health Care Plans
+ 42
Health Care Plans
+ 81
REIT - Healthcare Facilities
+ 174
REIT - Residential
+ 183
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.
 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 BDSI BioDelivery Sciences International, Inc. 95
Top Technical BDSI BioDelivery Sciences International, Inc. 95
Top Fundamental TPLM Triangle Petroleum Corporation 75
Top Tech. & Fund. KOG Kodiak Oil & Gas Corp. 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 DOM Dominion Resources Black Warrior Trust 90
Top Technical DOM Dominion Resources Black Warrior Trust 90
Top Fundamental DOM Dominion Resources Black Warrior Trust 90
Top Tech. & Fund. DOM Dominion Resources Black Warrior Trust 90
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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