Weekly Newsletter 05/29/15
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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 set another new high on Wednesday but disappointing economic data on Friday as 1st quarter GDP was revised down to -0.7% left the three major indexes with a loss for the week. The week started on Tuesday after the Memorial Day holiday with sharp decline as Greece's ability to make its next installment payment to the IMF came into doubt. This was resolved on Friday when Greece's Economy Minister said his country will be able to make its next debt payment. For an analysis of why this situation will not be resolved soon read John Nash's Game Theory and Greece.NASDAQ Composite Chart
 Weekly Breakout Report  

Volatility Squeeze breakouts dominated this week with 17 out of 25 breakouts for an average gain of 3.97%. I analyze the SIMO chart below.
 
Breakouts for Week Beginning 05/25/15
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close RS Rank* Last Close Current % off BOP Gain at Intraday High
05/27/15 SIMO SQZ Y 31.74 34.39 90 35.43 11.63 11.85
05/29/15 FPRX SQZ Y 23.54 25.75 93 25.75 9.39 9.43
05/27/15 PTLA SQZ Y 38.51 41.0304 88 41.95 8.93 9.3
05/27/15 SNOW CwH N 11.76 12.07 82 12.56 6.80 6.89
05/27/15 INFN SQZ Y 19.41 19.68 95 20.655 6.41 6.44
05/26/15 TRVN SQZ Y 6.77 6.77 92 7 3.40 6.2
05/28/15 GLMD SQZ Y 10.06 10.24 93 10.54 4.77 5.07
05/29/15 HTBX SQZ Y 6.59 6.89 82 6.89 4.55 4.55
05/27/15 DXCM SQZ Y 68.63 71.68 92 71.63 4.37 4.52
05/27/15 BLUE HTF N 186.36 189.93 99 194.45 4.34 4.36
05/27/15 TNAV CwH Y 9.40 9.75 90 9.04 -3.83 3.94
05/26/15 OPY SQZ Y 25.10 25.4 84 25.91 3.23 3.9
05/26/15 FEYE SQZ Y 45.07 45.16 85 46.58 3.35 3.88
05/26/15 SEMI SQZ Y 23.61 23.61 91 24.21 2.54 3.2
05/27/15 FBR SQZ Y 13.84 14.24 87 13.825 -0.11 2.96
05/29/15 AMCN HTF N 6.19 6.33 99 6.33 2.26 2.58
05/26/15 LFC SQZ Y 25.52** 77.35 95 23.86 -0.07 2.15
05/28/15 UNTD SQZ Y 17.06 17.37 89 17.27 1.23 1.82
05/29/15 ATRC SQZ Y 22.60 22.99 92 22.99 1.73 1.77
05/28/15 SLAB SQZ Y 54.70 54.9 82 55.66 1.76 1.76
05/28/15 EMKR CwH N 6.30 6.38 91 6.38 1.27 1.27
05/29/15 VBLT CwH N 8.06 8.13 96 8.13 0.87 1.12
05/28/15 SPLK CwH N 70.42 71.07 89 67.63 -3.96 0.92
05/28/15 LMNS CwH N 12.15 12.25 85 12.25 0.82 0.82
05/29/15 COO SQZ Y 180.88 181.71 82 181.71 0.46 0.54
Weekly Average (25 breakouts) 3.05 4.05
*RS Rank on day before breakout.
** adjusted for 3:1 split
 
 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

Recognizing A Volatility Squeeze


Our research has shown that breakouts from a cup and handle pattern are the most reliably profitable of the patterns we search for. We have also found that looking for stocks that are ascending the right side of a cup and that form a volatility squeeze is a reliable way to enter what could become a future cup and handle pattern (Volatility Squeeze Methoodology). This week's top breakout SIMO gives me an opportunity to explain again how this works.

We start by looking for stocks that are ascending the right side of a cup. We then examine their Bollinger Band and Keltner  Channel characteristics to see if they are in a volatility squeeze situation. If they are, and their momentum is positive and momentum is increasing (meaning that there is a positive slope to the momentum curve) then we put them on a SqueezePlay (SQZ) watchlist.

Our cup recognition algorithm determined that SIMO was ascending the right side of a cup pattern as shown on the chart below. The algorithm detected a volatility squeeze for the first time on 5/20/15 and you can see clearly that the Bollinger Band was within the Keltner Channel from 5/20/15.  We put SIMO on our Squeezeplay watchlist on 5/21 and a breakout attempt was made on 5/22 (we issued an alert at 9:45 at $30.55) but there was insufficient volume for it to be recognized as a full breakout. An alert was issued again on 5/27which was successful. If you had bought and held onto the first alert your gain at Friday's close would have been 16%.

Another interesting characteristic of this chart is that there is a shallow cup and handle pattern buried within it. The left cup is at 33.95 and a pivot and handle was formed at 31.99 on 5/18. However, at that point the cup was only 4 weeks long which was too short for cup and handle algorithm which requires a minimum cup length  of 6 weeks.

SIMO Volatility Squeeze
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 18010.7
-1.21% -1.05% Up
NASDAQ 5070.0 -0.38% 7.05% Up
S&P 500 2107.4 -0.88% 2.36% Up
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
258.24 %
NASDAQ Composite
267.32 %
NASDAQ Composite
280.5 %
NASDAQ Composite
284.96 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Drug Stores Drugs Wholesale Drugs Wholesale Toy & Hobby Stores
 Most Improved Industry (by change in technical rank2)
Surety & Title Insurance
+ 45
Gaming Activities
+ 80
Office Supplies
+ 193
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. 110
Top Technical PMFG PMFG, Inc. 110
Top Fundamental MDXG MiMedx Group, Inc 73
Top Tech. & Fund. AAC AAC Holdings, 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 VBLT Vascular Biogenics Ltd. 100
Top Technical TNAV TeleNav, Inc. 69
Top Fundamental EMKR EMCORE Corporation 83
Top Tech. & Fund. EMKR EMCORE Corporation 83
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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