Weekly Newsletter 05/08/15
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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  
NASDAQ Compoaite Chart
The market trended down for the first three days causing our trend signals to turn down for all three major indexes on Thursday. Friday brought a sharp turn around as the UK election results brought a  surprise victory for the Conservatives and Friday's employment report showed employers added 223,000 new jobs in April beating the consensus estimate of 218,000. Wage growth was minimal, however, which is expected to provide further reason for the Fed to hold off on an interest rate rise. The one day rally was insufficient to reverse our trend signals which remain down.

 Weekly Breakout Report  

The breakout of the week was Good Times Restaurants from a cup and handle pattern base. We issued an alert at 1:29 pm on Monday for GTIM  when priced at 8.35 which could have been purchased before closing for the day at 8.44. The stock gapped-up on Tuesday and closed at 9.35 on Friday for a gain of 12% over our alert price. This breakout could have been seen as a near certainty as we explain below.
 
Breakouts for Week Beginning 05/04/15
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close RS Rank* Last Close Current % off BOP Gain at Intraday High
05/04/15 GTIM CwH N 8.30 8.44 97 9.35 12.65 18.67
05/08/15 SSNI SQZ Y 10.66 11.95 83 11.95 12.10 12.1
05/08/15 IMPV CwH N 49.39 53.98 95 53.98 9.29 9.29
05/04/15 BSFT HTF N 35.85 37.63 91 34.63 -3.40 7.25
05/08/15 DATA CwH N 103.40 110.69 91 110.69 7.05 7.05
05/06/15 POWR SQZ Y 14.04 14.19 94 14.16 0.85 5.56
05/04/15 ATHM CwH N 53.31 55.02 94 50.09 -6.04 5.51
05/04/15 AMCX HTF N 77.27 80.02 86 76.25 -1.32 5.01
05/08/15 NRG HSB N 25.20 26.40 16 26.4 4.76 4.76
05/06/15 NRG HSB N 25.24 24.59 13 26.4 4.60 4.6
05/04/15 MATR CwH N 7.17 7.20 0 6.95 -3.07 4.46
05/07/15 PLCE SQZ Y 66.08 68.61 90 69.01 4.43 4.43
05/04/15 RGR CwH N 56.37 58.56 85 55.77 -1.06 4.26
05/07/15 ATSG SQZ Y 10.01 10.12 79 10.29 2.80 2.8
05/07/15 ICE SQZ Y 232.24 233.26 75 238.24 2.58 2.58
05/08/15 SPCB CwH N 12.74 13.03 94 13.03 2.28 2.28
05/04/15 OZM SQZ Y 13.21 13.3 76 12.7 -3.86 2.12
05/04/15 NDSN SQZ Y 80.78 81.63 71 81.69 1.13 1.67
05/08/15 ICE SQZ Y 234.76 238.24 74 238.24 1.48 1.48
05/07/15 WEN SQZ Y 11.06 11.19 87 11.08 0.18 1.36
05/08/15 LENS SQZ Y 8.82 8.84 90 8.84 0.23 0.23
05/06/15 TAXI HSB Y 10.73 10.62 32 10.61 -1.12 0.19
05/08/15 ESNT CwH N 26.00 26.00 81 26 0.00 0
Weekly Average (23 breakouts) 2.02 4.68
*RS Rank on day before breakout.
 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
Lessons from a High Volume Handle in a Cup and Handle Pattern

The breakout of GTIM was occasioned by the announcement on May 4 of a stock offering for the purpose of buying Bad  Daddy's Burger Bar.  In hindsight, we can see that Trading in GTIM on the day before breakout was a near certain indicator that insiders were buying in anticipation of the announcement. After a two day sell-off (probably by insiders to force the price down), the price surged up on Friday May 1 on 2 1/2 times average volume. This kind of action in the handle with a sell-off followed by a rise on higher volume, is text book behavior, but rarely do we see the indications that a breakout is coming as clearly as it was signaled here. At the next session (May 4) volume surged again to 10 times ADV and as we mentioned above, the stock could have been bought on  the alert before the end of day at up to 8.44.

We mention the importance positive price and volume performance in the handle  in our Cap and Handle Methodology page and highlighted it as long ago as 2005.

"After the price has stabilized (in the handle) it is not uncommon to see the price begin to rise on higher volume. This is an indication that institutions are starting to nibble and may indicate a strong breakout to come. We have noticed that breakouts are 17% stronger, on average, when the price and volume rise on the day before the breakout. See our newsletter of 4/23/05."

GTIM cup and handle chart pattern
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 18191.1 0.93% 2.06% Down
NASDAQ 5003.55 -0.04% 5.65% Down
S&P 500 2116.1 0.37% 2.78% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
Dow Jones
0.93 %
NASDAQ Composite
5.46 %
NASDAQ Composite
8.01 %
NASDAQ Composite
5.65 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Drugs Wholesale Sporting Goods Toy & Hobby Stores Toy & Hobby Stores
 Most Improved Industry (by change in technical rank2)
Networking & Communication Devices
+ 57
Basic Materials Wholesale
+ 87
Office Supplies
+ 196
Music & Video Stores
+ 175
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 PMFG PMFG, Inc. 119
Top Technical PMFG PMFG, Inc. 119
Top Fundamental GTN Gray Television, Inc. 66
Top Tech. & Fund. HQY HealthEquity, Inc. 52
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 MATR Mattersight Corporation 96
Top Technical ATHM Autohome Inc. 45
Top Fundamental ATHM Autohome Inc. 45
Top Tech. & Fund. ATHM Autohome Inc. 45
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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