Weekly Newsletter 02/27/15
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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 failed to top its 2000 high but did have its highest monthly close ever on Friday. Volume improved but there were two distribution days on Wednesday and again on Friday as economic growth for the fourth quarter of 2014 was revised down from 2.6% to 2.2%. I expect the index will move sideways into next week.
NASDAQ Composite
 Weekly Breakout Report  

As volume picked up, the number of breakouts did also jumping to 22 compared to last week's 11.

Breakouts for Week Beginning 02/23/15
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close RS Rank* Last Close Current % off BOP Gain at Intraday High
02/23/15 ZIOP HTF N 9.99 10.06 99.00 11.26 12.71 17.92
02/23/15 TREX CwH N 45.19 46.48 88.00 50.35 11.42 13.79
02/24/15 LNG CwH N 76.09 76.21 86.00 80.63 5.97 5.97
02/23/15 CRF HTF N 21.80 21.98 99.00 22.91 5.09 5.6
02/23/15 XPO CwH N 42.54 44.15 95.00 44.15 3.78 5.24
02/24/15 HSII CwH N 23.79 24.61 90.00 23.94 0.63 3.45
02/25/15 OSIR CwH N 16.90 17.48 84.00 17.27 2.19 3.43
02/27/15 AMKR CwH N 9.42 9.73 89.00 9.73 3.29 3.29
02/23/15 SGU CwH N 7.49 7.70 86.00 7.61 1.60 3.2
02/25/15 HTLF CwH N 30.00 30.60 85.00 30.71 2.37 2.97
02/24/15 ASML DB N 107.60 110.75 76.00 107.68 0.07 2.93
02/26/15 OLED CwH N 35.94 36.76 88.00 34.39 -4.31 2.28
02/27/15 FBP CwH N 6.47 6.59 90.00 6.59 1.85 1.85
02/25/15 GRUB CwH N 41.75 42.46 87.00 42.01 0.62 1.7
02/25/15 SPIL CwH N 8.96 9.06 90.00 8.85 -1.23 1.45
02/27/15 ATRO CwH N 68.63 69.56 88.00 69.56 1.36 1.36
02/25/15 MELI CwH N 132.61 134.22 86.00 130.97 -1.24 1.21
02/25/15 HRL CwH N 57.92 58.53 83.00 58.51 1.02 1.05
02/26/15 SPLK CwH N 68.94 69.57 83.00 67.25 -2.45 0.91
02/26/15 NXST CwH N 54.69 55.02 83.00 54.53 -0.29 0.6
Weekly Average (20 breakouts) 2.22 4.01
*RS Rank on day before breakout.

 
 New Features this Week Additional Value that we added this week

New Parameter and Filter for Watchlists

Following a request from a subscriber, I've added a new column and filter to the long position watchlists.

The new column shows the Last Close (i.e.the close on the day the watchlist was published) as percent of the breakout price  (BoP). This tells you how close the last close is to the breakout price.

New Column and Filter


This Week's Top Tip Tips for getting the most out of our site

How to Find Cup and Handle breakouts with a 90% Chance of Success


How should we use this new filter?

I analyzed all successful cup and handle pattern breakouts since 2009 and counted the number of successful breakouts for the last close price as a percent of the breakout price. Lets call that LC%. Here's what I found:

last close as % of BoP

This chart shows the % of breakouts for each increment of LC%. For example 22.2% of breakouts occurred when LC% was 99% or above, 27.1% occurred between 98% and 99% and so on.

Looking at the cumulative percentages, 90% of breakouts occurred when LC% was at or above 94.8%, and 50% of breakouts occurred when LC% was 98% or above.

cumulative % off BoP

Conclusion

The new filter can be used to eliminate watchlist stocks with a low probability of breakout and also to eliminate alerts on stocks with a low probability of breakout. Setting the filter to >= 95 will provide stocks with a better than 90% probability of successful breakout.

 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 18132.7 -0.04% 1.74% Up
NASDAQ 4963.53 0.15% 4.8% Up
S&P 500 2104.5 -0.27% 2.21% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
0.15 %
NASDAQ Composite
3.59 %
NASDAQ Composite
8.37 %
NASDAQ Composite
4.8 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Toy & Hobby Stores Toy & Hobby Stores Toy & Hobby Stores Toy & Hobby Stores
 Most Improved Industry (by change in technical rank2)
Recreational Goods - Other
+ 44
Music & Video Stores
+ 89
Music & Video Stores
+ 158
Music & Video Stores
+ 178
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 EVC Entravision Communications Corporation 101
Top Technical EVC Entravision Communications Corporation 101
Top Fundamental PSXP Phillips 66 Partners LP 49
Top Tech. & Fund. PSXP Phillips 66 Partners LP 49
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 FBP First BanCorp. 86
Top Technical SGU Star Gas Partners, L.P. 83
Top Fundamental GRUB GrubHub Inc. 38
Top Tech. & Fund. GRUB GrubHub Inc. 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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