Weekly Newsletter 07/11/14
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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 NASDAQ fell through the support trend line on Tuesday as concerns over another Portuguese bank crisis emerged. Friday's higher close indicated a recovery may be in progress and out trend indicators remain positive.
Nasdaq Comp.
 Weekly Breakout Report  

The decline in the NASDAQ meant that the number of breakouts fell to 16 from last week's 29. The cup and handle pattern again dominated the breakout list although the top performer, JNUG could also have been classified as a CwH stock - see the chart lesson below.

Breakouts for Week Beginning 07/07/14
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close Last Close Current % off BOP Gain at Intraday High
07/09/14 JNUG HTF N 30.00 32.81 33.58 11.93 11.93
07/09/14 PXLW CwH N 7.89 8.73 8.42 6.72 10.65
07/09/14 GPRE CwH N 34.03 35.30 36.46 7.14 7.14
07/09/14 SAND CwH N 7.24 7.54 7.27 0.41 6.22
07/09/14 PZE CwH N 6.83 7.05 7.19 5.27 5.42
07/07/14 ORBK SQZ Y 15.75 16.44 15.72 -0.19 4.38
07/09/14 SIL CwH N 14.39 14.66 14.7 2.15 4.03
07/09/14 EGO CwH N 7.64 7.91 7.72 1.05 3.53
07/09/14 PPP CwH N 8.01 8.17 8.29 3.50 3.5
07/07/14 TSEM SQZ Y 9.96 10.16 9.49 -4.72 2.01
07/09/14 MXL CwH Y 10.47 10.67 10.58 1.05 1.91
07/11/14 ESC CwH N 32.55 33.00 33 1.38 1.38
07/11/14 WDC CwH N 96.54 97.77 97.77 1.27 1.27
07/11/14 AB CwH N 26.57 26.82 26.82 0.94 0.94
07/08/14 PRSC SQZ Y 39.11 39.23 37.64 -3.76 0.31
07/08/14 RTI HSB N 26.98 27.03 26.15 -3.08 0.19
Weekly Average (16 breakouts) 1.94 4.05
 
 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

Chart Lesson: Cup and Handle vs High Tight Flag


Sometimes, if we don't identify a stock as cup and handle we will catch it as a high tight flag. A case occured this week with the breakout of JNUG. The first chart below shows the high tight flag pattern for JNUG. To recognize an HTF pattern, we require that the gain should be at least 100% within 8 weeks. In this case we see JNUG gained 113% in just 2 weeks and then formed a "flag" which looks a lot like a handle. The full requirement for a high tight flag pattern are described here

JNUG HTF

Looking at JNUG over a longer period, we see that it actually formed a well shaped cup following its sharp decline in March this year. In fact, the decline was so sharp that it fell 70% from the left cup high of 43.14. Our cup with handle algorithm eliminates cups with a depth greater than 60% so JNUG never appeared on our cup with handle watchlist. The full requirements for a cup with (and) handle pattern are described here.

JNUG CWHrc=

This example shows that although our algorithms for a cup and handle pattern may miss a profitable breakout stock there's a good chance that if it is truly a high flyer our high tight flag algorithm with capture it.
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 16943.8 2.21% 2.21% Up
NASDAQ 4415.49 5.72% 5.72% Up
S&P 500 1967.51 6.45% 6.45% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
-0.47 %
NASDAQ Composite
8.36 %
S&P 500
6.79 %
S&P 500
6.45 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Copper Drugs Wholesale Toy & Hobby Stores Toy & Hobby Stores
 Most Improved Industry (by change in technical rank2)
Food - Major Diversified
+ 101
Copper
+ 129
Foreign Utilities
+ 140
Copper
+ 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.
 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 SAND Sandstorm Gold Ltd 105
Top Technical SAND Sandstorm Gold Ltd 105
Top Fundamental EPAM EPAM Systems, Inc. 47
Top Tech. & Fund. QCOR Questcor Pharmaceuticals, Inc. 31
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 SAND Sandstorm Gold Ltd 106
Top Technical ESC Emeritus Corporation 38
Top Fundamental MXL MaxLinear, Inc 66
Top Tech. & Fund. MXL MaxLinear, Inc 66
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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