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|Although our market
trend indicators are still pointing up, I fear that we may soon see
a reversal. The NASDAQ Composite tested support at the 50 day
average level this week and although it did indeed find
support, the 50 day average line is itself trending down.
There were two distribution days, and only one accumulation day (on
Wednesday). Although the NASDAQ and other major indexes did close
modestly higher on Friday, they did so on low volume and each closed
the week with a more than 1% loss.
The Bureau of Economic Analysis will release its estimate of first quarter GDP growth on April 28, but the Federal Reserve Bank of Atlanta's GDPNow model predicts growth will only be at an annualized rate of 0.1%. If this estimate proves accurate, it will be a significant fall from the 4th quarter's 1.4% growth and will likely move markets downward.
The number of breakouts fell to just 16 this week. Although the Volatility Squeeze pattern produced the majority, it was Head and Shoulders Bottom pattern breakouts that produced the higher average gains.
|Brkout Date||Symbol||Base||Squeeze||BrkoutOut Price||Brkout Day Close||RS Rank*||Last Close||Current % off BOP||Gain at Intraday High|
|Weekly Average (16 breakouts)||2.8||3.6|
|*RS Rank on day before breakout.|
You will see above a chart of the number of breakouts per week over the last twelve months. The purpose of the chart is to show two things:
More discussion below.
of Successful Breakouts Trending Down
The chart above shows that the frequency of breakouts from a cup and handle pattern is higher than for the Volatility Squeeze pattern which is higher than the Head and Shoulders bottom pattern. Double Bottom breakouts are much less common.
While a high performing breakout can come from any pattern, as shown by this week's HSB breakouts, this analysis suggests that when looking for breakout candidates, one should focus on the Cup and Handle and Volatility Squeeze patterns.
We can also see that the recent trend is for fewer successful breakouts. This implies that a more conservative approach to trading breakouts is suggested as there are likely to be fewer successes.
|CSC||34.35||2,581,716||Computer Sciences Corporation||Information Technology||98||33.32|
|USCR||63.67||497,013||U S Concrete - Inc.||General Building Materials||98||62.44|
|SBS||6.80||3,397,618||Companhia de saneamento Basico Do Estado De Sao Pa||Water Utilities||97||6.53|
|FIZZ||45.30||170,805||National Beverage Corp.||Beverages - Soft Drinks||97||45.19|
|ROCK||28.75||364,196||Gibraltar Industries - Inc.||Steel & Iron||97||27.14|
|PSAU||18.52||59,280||PowerShares Global Gold & Precious Metals Portfoli||Closed-End Fund - Equity||96||18.39|
|TX||18.76||541,401||Ternium S.A.||Steel & Iron||96||18.47|
|MFLX||23.44||352,132||Multi-Fineline Electronix - Inc.||Printed Circuit Boards||95||23.35|
|BYD||21.25||2,323,719||Boyd Gaming Corporation||Resorts & Casinos||95||21.20|
|FIX||32.62||393,051||Comfort Systems USA - Inc.||General Contractors||95||32.59|
|Index||Value||Change Week||Change YTD||Trend1|
1The Market Trend 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.
|1 Week||13 Weeks||26 Weeks||Year-to-Date|
|1 Week||3 Weeks||13 Weeks||26 Weeks|
|Silver||Silver||Water Utilities||Auto Parts Stores|
|Music & Video Stores
|Charts of each industry rank and performance over 12 months are available on the site|
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