Weekly Newsletter 08/08/14
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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 Composite is trading between support at 4324 and resistance at the 50 dma level of 4380. At first glance, it appears that the index has formed a bearish double top pattern, and this would certainly be consistent with our trend indicator which is pointing down for all three major indexes. However, the index has not breached support consistently, so the jury is out as to the future direction. There is reason for optimism though, as the index closed with a gain for the week, despite there being two distribution days.

NASDAQ Comp.

There will be no newsletter next week as I will be returning to Maui from Sydney.

 Weekly Breakout Report  

The positive weekly gain for the NASDAQ produced a 50% jump in breakouts from 16 last week to 25 this week. Note that the three best intraday performers were from our SqueezePlay watchlist. SqueezePlay breakouts tend to perform better in the first few days after breakout. More on this below.
 
Breakouts for Week Beginning 08/04/14
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close Last Close Current % off BOP Gain at Intraday High
08/07/14 LEAF SQZ Y 27.36 29.65 32.88 20.18 20.18
08/05/14 QLYS SQZ Y 26.44 29.09 26.54 0.38 10.02
08/04/14 TSLA SQZ Y 233.37 238.52 248.13 6.32 8.15
08/06/14 TIBX HSB N 19.62 20.75 21.08 7.44 7.44
08/04/14 BCRX CwH N 13.02 13.22 13.96 7.22 7.22
08/05/14 NLS SQZ Y 11.12 11.58 11.91 7.10 7.1
08/06/14 WNR CwH N 42.64 43.66 44.93 5.37 5.37
08/08/14 BCRX CwH N 13.34 13.96 13.96 4.65 4.65
08/05/14 RARE SQZ Y 47.95 48.5 49.49 3.21 4.28
08/05/14 IART SQZ Y 48.22 50.01 48.65 0.89 3.71
08/04/14 VSI HSB N 42.23 43.60 37.55 -11.08 3.24
08/05/14 SNCR CwH N 40.68 41.98 38.3 -5.85 3.2
08/08/14 MDVN CwH N 78.44 80.93 80.93 3.17 3.17
08/05/14 DECK CwH N 90.76 91.71 93.47 2.99 2.99
08/07/14 FSLR SQZ Y 66.40 68.17 67.83 2.15 2.67
08/06/14 KEP CwH N 20.89 21.09 21.36 2.25 2.25
08/07/14 SCTY CwH N 74.29 75.63 70.14 -5.59 1.8
08/04/14 MKSI CwH N 32.04 32.19 32.44 1.25 1.5
08/07/14 VGR SQZ Y 21.28 21.5 21.5 1.03 1.03
08/07/14 FDP SQZ Y 30.79 30.79 31.03 0.78 0.78
08/08/14 RUSHA CwH N 35.85 36.04 36.04 0.53 0.53
08/06/14 EPAM SQZ Y 40.87 40.9 40.72 -0.37 0.51
08/08/14 FDP SQZ Y 30.89 31.03 31.03 0.45 0.45
08/05/14 SNSS CwH N 7.00 7.01 6.7 -4.29 0.14
08/07/14 TMF CwH N 65.66 65.75 65.44 -0.34 0.14
Weekly Average (25 breakouts) 1.99 4.1

 
 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

SqueezePlay Breakouts Compared to CWH Breakouts


The SqueezePlay (SQZ) watchlist selects stocks in a squeeze that are lower in their base than the Cup with Handle (CwH) watchlist. Since, in theory, the SQZ stocks have more potential to move higher, the question arises as to which breakouts perform better. I was interested in both a short term and longer term comparison.

For this exercise, I compared SQZ stock breakouts since March, when we introduced the SQZ list, to CWH breakouts for the same period. This gave me 19 weeks of data. I was interested in both a short term and longer term comparison, so I compared the performance in the first few days after breakout to the full 19 weeks.

The first chart shows the performance over the first 20 days, including the breakout day (Day 0). The data is derived from the average gain made by day after breakout. It is apparent that SQZ breakouts tend to perform better in the first 6 days after breakout but that there is little difference in subsequent days.

SQZ vs CWH Daily

The next chart shows the performance over the whole 19 weeks, including the breakout day (Day 0). The data is derived from the average gain 0, 7, 14, etc days after breakout. We see the SQZ performance is better in the first 2 weeks and that thereafter the CWH breakouts perform better. Note that the longer time frames include the recent correction and that in this period the SQZ stocks perform better.

SQZ vs CWH Weekly

Conclusion

The time period under analysis is too short to provide a definitive answer but it seems that SqueezePlay breakouts perform better in the short term. If you are a swing trader, therefore, trading SqueezePlay breakouts may prove more profitable for you. If your time horizon is longer, then cup with handle breakouts will prove slightly more profitable for you.
 
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 16553.9 0.37% -0.14% Down
NASDAQ 4370.9 0.42% 4.65% Down
S&P 500 1931.59 0.33% 4.5% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
0.42 %
NASDAQ Composite
2.83 %
S&P 500
7.49 %
NASDAQ Composite
4.65 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Aluminum Aluminum Drugs Wholesale Toy & Hobby Stores
 Most Improved Industry (by change in technical rank2)
Investment Brokerage - Regional
+ 49
Home Health Care
+ 94
Home Health Care
+ 181
Foreign Utilities
+ 212
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 PZE Petrobras Argentina S.A. 102
Top Technical PZE Petrobras Argentina S.A. 102
Top Fundamental BIIB Biogen Idec Inc. 27
Top Tech. & Fund. FB Facebook, 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
Category
Symbol
Company Name
Expected Gain1
Best Overall SNSS Sunesis Pharmaceuticals, Inc. 91
Top Technical BCRX BioCryst Pharmaceuticals, Inc. 62
Top Fundamental SNCR Synchronoss Technologies, Inc. 36
Top Tech. & Fund. SNCR Synchronoss Technologies, Inc. 36
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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