Weekly Newsletter 11/14/14
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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  

For an explanation of why we focus on the NASDAQ each week, see this week's Top Tip.

The NASDAQ gained a modest 1.2% for the week, easily outpacing the other major indexes. Volumes were equally modest, however, as our Equivolume Chart shows. There were two accumulation days but volumes were mostly below average except for Thursday, when the index set another post 2000 crash high.

Although the Fed has ended QE, they have promised to maintain low interest rates for the foreseeable future. This implies that equities will continue to be preferable to bonds and so the bull market will likely continue. Regular readers will know I frequently read Barry Ritholz blog "The Big Picture" and Barry is today suggesting that we are in a new secular bull market, meaning one which extends for many years and outlasting shorter term cyclical variations.

Equivolume Chart

 Weekly Breakout Report  

Lower volumes meant that although there were many alerts this week, fewer breakouts were confirmed because they didn't meet the minimum volume thresholds.
 
Breakouts for Week Beginning 11/10/14
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close Last Close Current % off BOP Gain at Intraday High
11/13/14 IMDZ HTF N 30.99 35.97 35.22 13.65 16.07
11/11/14 RAX CwH N 38.49 42.25 43.25 12.37 12.57
11/14/14 BITA CwH N 83.72 91.91 91.91 9.78 9.78
11/13/14 RDWR CwH N 19.30 20.32 20.79 7.72 7.72
11/14/14 WIFI SQZ Y 7.52 8.01 8.01 6.52 6.52
11/12/14 OPHT SQZ Y 41.94 43.89 40.05 -4.51 4.65
11/10/14 HQH CwH N 30.50 31.46 30.77 0.89 3.15
11/12/14 AFFX CwH N 9.50 9.78 9.71 2.21 2.95
11/14/14 FPRX CwH N 14.85 15.19 15.19 2.29 2.29
11/10/14 KW CwH N 27.40 27.90 26.56 -3.07 1.82
11/14/14 KMP CwH N 95.66 96.25 96.25 0.62 0.62
11/14/14 CDW CwH N 32.75 32.95 32.95 0.61 0.61
11/13/14 ATO CwH N 54.43 54.51 53.29 -2.09 0.15
11/14/14 INDY CwH N 31.42 31.44 31.44 0.06 0.06
Weekly Average (14 breakouts) 3.36 4.93

 
 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

NASDAQ Delivers More Breakouts and Higher Returns


Although I always focus on the NASDAQ in my market commentary, because it is intuitively obvious to me that is is from that market where the most profitable breakouts come from, I don''t remember ever justifying it quantitatively, so I have now done an analysis by major market and watchliist for 2014.

The following table shows the number of breakouts from the NASDAQ, NYSE and AMEX markets this year, and further breaks them down by watchlist. The final column shows the percentage gain to the highest intraday price achieved after breakout. Breakouts that don't gain at least 5% after breakout are excluded.

Successful Breakouts 2014
Exchange No. BrkOuts
by Exchange
Avg Max Gain
by Exchange
WatchList No. Brkouts
by Watchlist
Avg Max Gain
by Watchlist
NASDAQ 418 23% CWH 252 25%



DB 7 17%



HSB 0 0%



HTF 24 27%



SQZ 135 19%






NYSE 386 12% CWH 238 12%



DB 14 16%



HSB 2 6%



HTF 1 0%



SQZ 131 11%






AMEX 11 17% CWH 6 13%



DB 0 0%



HSB 1 33%



HTF 0 0%



SQZ 4 21%

You will see that the NASDAQ exchange produces the most successful breakouts. Other points to note are:
  • very hew Head and Shoulder Bottoms (HSB) due to generally rising markets
  • AmEx statistics are unreliable due to the small numvber of cases (especially HSB)
  • Cup with Handle (CwH) and SqueezePlay (SQZ) are the both the most prolific and best performing breakouts, with the exception of the much rarer High Tight Flag.

Conclusion

When performing due diligence on the watchlists for the coming session, you will save time and improve profits by looking only at NASDAQ listed stocks on the CwH, HTF and SQZ watchlists.

 

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 17634.7 0.35% 6.38% Up
NASDAQ 4688.54 1.21% 12.26% Up
S&P 500 2039.82 0.39% 10.36% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
1.21 %
Dow Jones
5.01 %
NASDAQ Composite
14.62 %
NASDAQ Composite
12.26 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Toy & Hobby Stores Toy & Hobby Stores Aluminum Drugs Wholesale
 Most Improved Industry (by change in technical rank2)
Basic Materials Wholesale
+ 69
Dairy Products
+ 76
Drug Related Products
+ 145
Personal Services
+ 172
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 JRJC China Finance Online Co. Limited 98
Top Technical JRJC China Finance Online Co. Limited 98
Top Fundamental BITA Bitauto Holdings Limited 44
Top Tech. & Fund. BITA Bitauto Holdings Limited 44
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 AFFX Affymetrix, Inc. 68
Top Technical INDA Ishares MSCI India ETF 32
Top Fundamental CDW CDW Corporation 38
Top Tech. & Fund. CDW CDW Corporation 38
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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