Weekly Newsletter 06/19/15
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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 continues to lead the major indexes with a 1.3% gain for the week and also set a new high on Thursday. It is the only one of the major indexes to maintain a positive trend according to our trend model. Despite heavy volume on Friday as the markets faced a weekend of uncertain moves related to the Greek debt crisis, the NASDAQ gave up just 0.35% compared to 0.58% and 0.56% for the DJI and S&P 500 respectively.

It appears the Greek situation may come to a head next week with a meeting of Euro finance ministers on Monday as Greece will almost certainly default on a debt payment due at the end of the month. I expect Greece will exit the European Union and after a short gasp by the markets, the upward trend will resume.
NASDAQ Chart

 Weekly Breakout Report  

This week saw the largest number of breakouts we have ever recorded. Nine stocks closed the week with better than 10% gains. Of the nine, 5 were from cup and handle patterns and 4 from volatility squeeze patterns.

Breakouts for Week Beginning 06/15/15
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close RS Rank* Last Close Current % off BOP Gain at Intraday High
06/15/15 KYTH CwH N 56.43 59.75 92 75 32.91 32.91
06/17/15 RDUS CwH N 49.71 51.73 99 60 20.70 20.7
06/18/15 SQBG SQZ Y 14.26 16.08 90 17 19.21 19.21
06/16/15 POZN CwH N 9.72 10.02 83 11.57 19.03 19.03
06/16/15 ZIOP SQZ Y 10.73 10.99 98 12.14 13.14 13.98
06/18/15 REPH CwH N 11.83 13.13 98 13.4 13.27 13.27
06/17/15 ZIOP SQZ Y 10.97 11.57 98 12.14 10.67 11.49
06/19/15 IPCM SQZ Y 52.31 57.82 83 57.82 10.53 10.53
06/15/15 VDSI CwH N 30.76 32.00 97 33.91 10.24 10.24
06/18/15 SHI SQZ Y 52.21 57.22 97 54.01 3.45 9.6
06/16/15 EVC CwH N 7.54 7.62 91 8.25 9.42 9.42
06/15/15 MGNX SQZ Y 33.98 35.36 88 36.5 7.42 8.42
06/18/15 MDXG SQZ Y 10.46 11.32 87 11.02 5.35 8.22
06/18/15 CDZI HSB N 9.05 9.55 17 9.77 7.96 7.96
06/18/15 ALGT DB N 168.31 178.02 79 179.43 6.61 6.61
06/15/15 PFPT CwH N 62.66 63.09 93 66.49 6.11 6.38
06/17/15 EW SQZ Y 137.97 141.6 84 146.17 5.94 5.94
06/16/15 SONC SQZ Y 31.53 31.59 86 33.36 5.80 5.8
06/18/15 ZLTQ SQZ Y 30.03 31.77 83 31.38 4.50 5.79
06/17/15 SRPT HTF N 28.76 29.10 97 30.35 5.53 5.53
06/16/15 JAKK CwH N 8.51 8.85 90 8.89 4.47 5.52
06/17/15 XON CwH N 47.80 48.56 96 50.27 5.17 5.17
06/16/15 PAYC SQZ Y 36.49 38.24 96 37.71 3.34 5.12
06/16/15 THRM SQZ Y 53.86 55.13 87 56.33 4.59 5.09
06/17/15 NWHM CwH N 15.98 15.98 80 16.77 4.94 4.94
06/15/15 XRM SQZ Y 17.22 17.73 80 17.94 4.18 4.76
06/18/15 HIFR CwH N 32.20 33.19 85 33.72 4.72 4.72
06/18/15 LPCN SQZ Y 7.64 7.91 81 8 4.71 4.71
06/18/15 HQY CwH N 29.28 29.38 89 30.59 4.47 4.47
06/17/15 TYL SQZ Y 123.10 124.35 83 128.5 4.39 4.39
06/18/15 MGNX CwH N 35.36 36.84 91 36.5 3.22 4.19
06/15/15 COT SQZ Y 10.10 10.21 91 10.35 2.48 4.06
06/19/15 JBSS SQZ Y 52.87 55 95 55 4.03 4.03
06/18/15 FLWS SQZ Y 10.30 10.71 87 10.59 2.82 3.98
06/19/15 ITCI CwH N 28.76 29.84 94 29.84 3.76 3.76
06/17/15 MBLY CwH N 52.17 54.05 81 53.28 2.13 3.6
06/17/15 CYBR CwH N 71.35 73.89 96 73.22 2.62 3.56
06/17/15 MMSI SQZ Y 21.13 21.57 92 21.75 2.93 3.41
06/15/15 CFI SQZ Y 28.07 28.2 92 28.58 1.82 3.35
06/18/15 TYL SQZ Y 124.39 127.45 86 128.5 3.30 3.3
06/17/15 ELLI SQZ Y 66.03 66.63 97 68.14 3.20 3.2
06/17/15 CRM SQZ Y 73.38 74.42 86 75 2.21 3.18
06/18/15 MKTX SQZ Y 88.75 89.21 91 91.51 3.11 3.11
06/16/15 CCS SQZ Y 21.04 21.28 80 21.57 2.52 3.04
06/17/15 WWE CwH N 15.97 16.45 82 16.32 2.19 3.01
06/17/15 TGT SQZ Y 80.96 82.1 82 83.35 2.95 2.95
06/18/15 NBIX CwH Y 45.98 47.11 98 47.31 2.89 2.89
06/19/15 NWHM SQZ Y 16.31 16.77 84 16.77 2.82 2.82
06/19/15 VASC SQZ Y 34.54 35.46 92 35.46 2.66 2.66
06/18/15 AMZN SQZ Y 428.09 439.39 90 434.92 1.60 2.64
06/18/15 PBE CwH N 58.40 59.83 80 59.91 2.59 2.59
06/18/15 AMPH CwH N 16.85 17.00 87 17.28 2.55 2.55
06/18/15 IBB CwH N 368.61 377.88 87 377.49 2.41 2.51
06/16/15 IMH SQZ Y 21.10 21.62 99 20.84 -1.23 2.46
06/19/15 EXAS CwH Y 28.62 29.29 91 29.29 2.34 2.34
06/19/15 PRSC SQZ Y 51.75 52.95 84 52.95 2.32 2.32
06/19/15 SSNC SQZ Y 63.35 64.79 85 64.79 2.27 2.27
06/19/15 FDEF SQZ Y 35.54 36.25 82 36.25 2.00 2
06/17/15 TSCO SQZ Y 91.13 91.73 88 92.44 1.44 2
06/18/15 KRFT SQZ Y 85.50 86.83 94 87.2 1.99 1.99
06/16/15 MTD SQZ Y 336.66 339.41 83 338 0.40 1.92
06/16/15 GSBC SQZ Y 40.74 41.49 83 41.4 1.62 1.84
06/16/15 ORA SQZ Y 37.64 38.06 86 38.32 1.81 1.81
06/17/15 RDWR SQZ Y 23.98 24 87 24.4 1.75 1.75
06/19/15 FICO SQZ Y 88.97 90.33 89 90.33 1.53 1.53
06/18/15 DIS SQZ Y 111.59 113.22 83 112.62 0.92 1.46
06/18/15 TGT SQZ Y 82.15 83.19 83 83.35 1.46 1.46
06/19/15 GTS SQZ Y 24.65 25 86 25 1.42 1.42
06/19/15 XXIA SQZ Y 13.17 13.35 82 13.35 1.37 1.37
06/18/15 NOC SQZ Y 163.00 165.16 80 165.05 1.26 1.33
06/16/15 ATML CwH N 10.17 10.24 82 10.3 1.28 1.28
06/18/15 HQH SQZ Y 35.70 36.15 80 35.95 0.70 1.26
06/19/15 PRXL SQZ Y 69.72 70.6 80 70.6 1.26 1.26
06/19/15 NEWT SQZ Y 17.78 18 99 18 1.24 1.24
06/17/15 MTD SQZ Y 339.27 343.14 83 338 -0.37 1.14
06/18/15 MMSI SQZ Y 21.61 21.85 93 21.75 0.65 1.11
06/19/15 MSFG CwH N 21.78 22.02 82 22.02 1.10 1.1
06/15/15 ALDR HTF N 47.93 48.42 98 46.68 -2.61 1.02
06/19/15 FDP SQZ Y 38.54 38.93 80 38.93 1.01 1.01
06/17/15 CWCO CwH N 13.00 13.12 84 12.89 -0.85 0.92
06/19/15 LOCK CwH N 16.86 17.01 81 17.01 0.89 0.89
06/18/15 IMPR CwH N 16.15 16.28 84 16.04 -0.68 0.8
06/19/15 CYTK SQZ Y 6.46 6.51 85 6.51 0.77 0.77
06/19/15 SCVL SQZ Y 28.43 28.61 90 28.61 0.63 0.63
06/18/15 CRH CwH N 29.25 29.26 82 29.43 0.62 0.62
06/19/15 MTN SQZ Y 107.69 108.34 85 108.34 0.60 0.6
06/17/15 RDN SQZ Y 18.58 18.68 82 18.5 -0.43 0.54
06/19/15 TGTX SQZ Y 17.01 17.1 91 17.1 0.53 0.53
06/19/15 WOOF SQZ Y 54.09 54.37 85 54.37 0.52 0.52
06/19/15 GRMN HSB Y 46.61 46.84 18 46.84 0.49 0.49
06/19/15 TREX SQZ Y 51.75 51.97 90 51.97 0.43 0.43
06/19/15 VRTX SQZ Y 127.51 128.04 89 128.04 0.42 0.42
06/19/15 HTLF CwH N 37.03 37.17 92 37.17 0.38 0.38
06/19/15 ASGN SQZ Y 39.73 39.87 83 39.87 0.35 0.35
06/19/15 KRFT SQZ Y 86.93 87.2 94 87.2 0.31 0.31
06/18/15 WX SQZ Y 43.64 43.67 90 43.76 0.27 0.27
06/19/15 HXL SQZ Y 51.53 51.63 84 51.63 0.19 0.19
06/18/15 TCO HTF N 75.21 75.34 34 74.57 -0.85 0.17
06/19/15 USNA SQZ Y 136.05 136.28 95 136.28 0.17 0.17
06/19/15 IBB SQZ Y 376.95 377.49 88 377.49 0.14 0.14
06/16/15 SQBK CwH N 28.00 28.04 87 27.59 -1.46 0.14
06/19/15 AFH SQZ Y 19.11 19.13 83 19.13 0.10 0.1
06/19/15 HELE CwH N 96.45 96.55 94 96.55 0.10 0.1
06/19/15 OMER SQZ Y 21.04 21.06 80 21.06 0.10 0.1
06/19/15 EROS CwH N 23.42 23.44 92 23.44 0.09 0.09
06/19/15 STMP SQZ Y 72.83 72.89 96 72.89 0.08 0.08
06/19/15 ORLY SQZ Y 229.32 229.45 89 229.45 0.06 0.06
06/19/15 LCI SQZ Y 59.66 59.69 81 59.69 0.05 0.05
06/19/15 LGIH CwH Y 19.13 19.14 82 19.14 0.05 0.05
06/19/15 ADVS SQZ Y 44.19 44.2 88 44.2 0.02 0.02
Weekly Average (110 breakouts) 3.26 3.7
*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

Definitive Proof of the Importance of Above Average Volume Before Breakout

Several times recently in this newsletter I've commented on the importance of above average volume on the day before breakout. (see here and here). Those observations were mostly anecdotal so this week I decided to analyze how breakouts with above average volume on the  day before breakout really perform.

To do so I looked at all cup and handle pattern breakouts since 2008. This is important because it includes both the worst and best bear and bull markets in most of our lifetimes. It also provided 4584 cases to analyze.

I compared two groups of breakouts:
  1. Those with above average volume and positive price movement on the day before breakout divided into three groups
    • all above average volume
    • at least 1.5 times average volume
    • at least two times average volume
  2. Those with below average volume irrespective of price change

I also looked how these two groups performed on the day of breakout, after 7 days and the best close within 30 days of breakout.


Brkout Day Gain
%
7 Day Gain
%
30 Day Max Gain
%
Above Avg. Vol. 5.1 4.5 12.1
>= 1.5 x Avg. Vol.
6.5 4.9 12
>= 2 x Avg. Vol.
7.7 4.7 11.7
Below Avg. Vol.
2.7 3 11.1

It is clear that a positive price move combined with above average volume significantly improves the short term performance. Although the advantage is still present over 30 days, it is less distinct.

Note also that some profit taking of early gains reduces the 7 day performance.

Conclusion

Above average volume combined with a positive price move the day before breakout substantially improves performance on and after breakout. Use of the "Above average volume" filter will help you find these stocks.
 
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 18015.9 0.65% 1.08% Down
NASDAQ 5117 1.3% 8.04% Up
S&P 500 2109.99 0.76% 2.48% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
1.3 %
NASDAQ Composite
1.8 %
NASDAQ Composite
7.38 %
NASDAQ Composite
8.04 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Drug Stores Drug Stores Drugs Wholesale Drugs Wholesale
 Most Improved Industry (by change in technical rank2)
Technical Services
+ 35
Tobacco Products - Other
+ 163
Tobacco Products - Other
+ 206
Tobacco Products - Other
+ 200
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 GLUU Glu Mobile Inc. 103
Top Technical GLUU Glu Mobile Inc. 103
Top Fundamental ILMN Illumina, Inc. 24
Top Tech. & Fund. HRTG Heritage Insurance Holdings, 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 JAKK JAKKS Pacific, Inc. 82
Top Technical ITCI Intra-Cellular Therapies Inc. 52
Top Fundamental CYBR CyberArk Software Ltd. 49
Top Tech. & Fund. CYBR CyberArk Software Ltd. 49
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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