Weekly Newsletter 09/11/15
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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  

As a note to new subscribers, I always focus on the NASDAQ Composite in this section as it is from this index that the most successful  breakouts occur.

The index rose almost 3% this week to provide the best performance of the three major indexes. Our market trend  indicator remains negative, however, which in the past has always correlated with a lower number of successful breakouts, so caution  is still advised.

The index closed at 4822 and faces resistance at 4828. Expect a breakthrough if the Fed holds off on rate increases on Wednesday. Speculation that that will be the outcome of next week's meeting, may generate a move higher earlier in the week.

NASADQ Composite Chart

 Weekly Breakout Report  

Volatility Squeeze breakouts dominated this week with 20 out of 23 breakouts. The top 4, STRP, CNCE, REPH and TXMD, all signaled they could possibly breakout with a move higher on above average volume on the day before breakout. Thia is a characteristic of successful breakouts that I have frequently stressed in recent weeks.
 
Breakouts for Week Beginning 09/07/15
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close RS Rank* Last Close Current % off BOP Gain at Intraday High
09/09/15 STRP SQZ Y 24.46 28.31 96 38.25 56.38 56.38
09/09/15 CNCE SQZ Y 16.60 17.96 95 19.27 16.08 16.08
09/08/15 REPH SQZ Y 14.69 15.86 99 16.89 14.98 14.98
09/09/15 TXMD SQZ Y 6.59 6.6 90 7.33 11.23 11.23
09/09/15 REPH SQZ Y 15.85 15.97 99 16.89 6.56 6.56
09/08/15 SIGM SQZ Y 10.30 10.88 98 8.69 -15.63 5.63
09/11/15 INCY CwH N 124.80 131.01 98 131.01 4.98 4.98
09/10/15 MPAA SQZ Y 31.91 32.6 82 32.9 3.10 3.1
09/11/15 NUVA SQZ Y 52.51 54.05 91 54.05 2.93 2.93
09/09/15 FLML SQZ Y 22.86 23.04 96 23.52 2.89 2.89
09/08/15 STBZ SQZ Y 20.20 20.74 82 20.49 1.44 2.67
09/09/15 SFNC SQZ Y 45.86 46.43 84 46.56 1.53 2.4
09/08/15 CYTK SQZ Y 7.22 7.38 96 7.31 1.25 2.35
09/09/15 DMRC SQZ Y 38.91 39.68 97 35.96 -7.58 1.98
09/11/15 NCI SQZ Y 15.35 15.65 82 15.65 1.95 1.95
09/11/15 CCS CwH Y 23.06 23.39 91 23.39 1.43 1.43
09/11/15 RUTH SQZ Y 16.16 16.37 91 16.37 1.30 1.3
09/11/15 CBZ SQZ Y 9.97 10.09 88 10.09 1.20 1.2
09/10/15 JAKK SQZ Y 9.86 9.92 96 9.92 0.61 0.61
09/09/15 BFIN SQZ Y 12.14 12.15 80 12.2 0.49 0.49
09/11/15 FIZZ CwH N 28.22 28.31 95 28.31 0.32 0.32
09/10/15 DEG SQZ Y 22.66 22.67 88 22.63 -0.13 0.04
09/09/15 ABIO SQZ Y 6.64 6.64 83 6.4 -3.61 -0
Weekly Average (23 breakouts) 4.51 6.15
*RS Rank on day before breakout.

 
 New Features this Week Additional Value that we added this week

I've added a new annotation to cup and handle and double bottom charts that  clearly shows how our algorithms recognized each of these patterns. This should make it easier for subscribers to visualize the patterns,which in some cases could be quite obscure.

The new annotations are shown when you click  on a symbol in the CwH and DB watchlists, they are not yet available in the chart browser.

The shape of the the cup and the shape of the handle should  now be easier to recognize as shown here.
example of cup and handle pattern  chart
The double bottom pattern also becomes clearer as in this example for HASI

example of double bottom pattern chart
This Week's Top Tip Tips for getting the most out of our site

Current market conditions clearly favor the Volatility Squeeze pattern as this weeks breakouts show. This is not a pattern that was recognized by O'Neil in How to Make Money in Stocks,  but it is one that has proven to be quite profitable, ranking just behind the cup and handle pattern, in our performance rankings. I developed it originally as a complement to the cup and handle, as research showed that a handle that was also in a volatility squeeze performed particularly well on breakout day (see http://www.breakoutwatch.com/newsletter/archive/2015-04-11.php#6, and then developed it as a stand-alone pattern.

The derivation of the pattern is described on the methodology tab on the Volatility Squeeze watchlist (http://www.breakoutwatch.com/watchlists/html/SQZ_meth.html).

This week's breakout of STRP shows how powerful this pattern can be.
volatility Squeeze chart pattern for STRP
 Market Summary Overview of market direction and industry rotation
Index Value Change Week Change YTD Trend
Dow 16433.1 2.05% -7.8% Down
NASDAQ 4822.34 2.96% 1.82% Down
S&P 500 1961.05 2.07% -4.75% Down
 Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
NASDAQ Composite
2.96 %
NASDAQ Composite
-4.53 %
NASDAQ Composite
-1.01 %
NASDAQ Composite
1.82 %
 Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Tobacco Products - Other Music & Video Stores Tobacco Products - Other Drugs Wholesale
 Most Improved Industry (by change in technical rank2)
Aerospace/Defense - Major Diversified
+ 87
Aerospace/Defense - Major Diversified
+ 90
Long Distance Carriers
+ 142
Tobacco Products - Other
+ 210
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 NEO NeoGenomics, Inc. 96
Top Technical NEO NeoGenomics, Inc. 96
Top Fundamental PAYC Paycom Software, Inc. 50
Top Tech. & Fund. PAYC Paycom Software, Inc. 50
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 CCS Century Communities, Inc. 57
Top Technical CCS Century Communities, Inc. 57
Top Fundamental CCS Century Communities, Inc. 57
Top Tech. & Fund. CCS Century Communities, Inc. 57
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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