Breakoutwatch Weekly Summary 01/21/17

You are receiving this email because you are or were a subscriber, or have subscribed to our weekly newsletter. This newsletter summarizes the breakout events of the week and provides additional guidance that does not fit into our daily format. It is published each weekend.

New Features this Week
Strategy Suggestions
Breakouts Summary
Breakouts Detail
Top Cup and Handle Chart Pattern Stocks
Breakouts Index
Major Indexes Performance
Best Performing Index
Best Performing Industry
Most Improved Industry

Weekly Commentary
The major indexes fell slightly this week with the NASDAQ Composite under performing despite, or because of, its early strength  so far this year. Volumes were at or below the 50 day average limiting the number of breakouts to just seven this week although two of them, SALT and EMES, were very strong with gains of over 20%. Both of these had very high Relative Strength ranks, 94 and 98  respectively, before breakout which is consistent with my research since beginning this site, that high RS rank is  the most significant metric for producing strong gains on breakout. I've recently completed an analysis of what worked in 2016 and that conclusion was again confirmed and I have revised my suggested  trading strategy accordingly. See my Strategy Suggestions below.

The NASDAQ has gained 11% since the election so a period of consolidation is unsurprising. We can expect that to continue partly due to the recent rapid rise but also because there is now some uncertainty as to what the Trump economy will actually bring.


Breakouts Summary by Watchlist for Week Beginning 01/16/17
List Breakouts Avg. Gain
CWH 3 9.18
SQZ 3 8.95
HTF 1 0.24
Breakouts Detail for Week Beginning 01/16/17
Brkout Date Symbol Base Squeeze BrkoutOut Price Brkout Day Close RS Rank* Last Close Current % off BOP Gain at Intraday High
2017-01-18 SALT CWH n 6.30 7 96 7.55 19.84% 24.29%
2017-01-18 EMES SQZ y 13.46 14 98 15.88 17.98% 22.88%
2017-01-20 NVEE SQZ y 36.16 39 89 38.6 6.75% 7.85%
2017-01-18 BPI CWH n 10.86 11 88 11.49 5.8% 6.63%
2017-01-20 IIVI SQZ y 30.21 31 88 30.85 2.12% 3.28%
2017-01-19 VCRA CWH n 20.00 20 84 20.38 1.9% 6.15%
2017-01-20 HIIQ HTF n 20.65 21 99 20.7 0.24% 1.69%
*RS Rank on day before breakout.

New Features this Week

No new features this  week.
Strategy Suggestions

Over last week's long weekend I conducted an analysis of the metrics that produced the strongest returns during 2016. That produced a significant update to my strategy suggestions for trading cup and handle pattern stocks which are now described here. The most important result is that I've revised upwards my suggested minimum RS rank from 92 to 94.

The new strategy could have returned profits of well over 100% during 2016 but of course there is no guarantee that will be repeated during 2017. Nevertheless, without a crystal ball,  history is all we have to go on when planning for the future.The chart below shows how the strategy could have performed during 2016 using our cup and handle backtest tool. Note this chart does not allow for brokerage fees or slippage, although you factor these into the backtest if you run it for yourself.

Backtest Results 2016
Top Rated Cup and Handle Stocks as of Friday January 20, 2017
Symbol BO
Company Industry RS
AXTI 6.20 386,104 AXT Inc Semiconductor - Integrated Circuits 96 6.03
PBR 11.71 34,686,129 Petroleo Brasileiro S.A.- Petrobras Oil & Gas Drilling & Exploration 96 11.20
BVN 13.55 2,667,333 Buenaventura Mining Company Inc. Industrial Metals & Minerals 95 13.15
ETE 20.05 10,563,930 Energy Transfer Equity - L.P. Oil & Gas Pipelines 94 18.00
TPC 29.70 1,008,388 Tutor Perini Corporation Heavy Construction 94 27.80
SPAR 9.80 175,642 Spartan Motors - Inc. Trucks & Other Vehicles 93 8.30
KMT 36.12 1,557,448 Kennametal Inc. Machine Tools & Accessories 92 34.69
These stocks meet our suggested screening factors for our Cup and Handle Chart Pattern watchlist.
See new suggestions for trading cup and handle Breakouts
Major Index Summary
Index Value Change Week Change YTD Trend1
Dow 19827.2
-0.29% 0.33% Up
NASDAQ 5555.33
-0.34% 3.2% Up
S&P 500 2271.31
-0.15% 1.45% Up
1The Market Trend is derived from our proprietary market model. The market model is described on the sitehere.
2The site also shows industry rankings based on fundamentals, combined technical and fundamentals, and on price alone. The site also shows daily industry movements.
Best Performing Index
1 Week 13 Weeks 26 Weeks Year-to-Date
S&P 500 Dow Jones
5.67 %
NASDAQ Composite
8.92 %
NASDAQ Composite
3.2 %
Best Performing Industry (by average technical score over each period)
1 Week 3 Weeks 13 Weeks 26 Weeks
Basic Materials Wholesale
Basic Materials Wholesale
Regional - Southwest Banks
Manufactured Housing
Most Improved Industry (by change in technical rank2)
Music & Video Stores
Long Distance Carriers
Basic Materials Wholesale
Charts of each industry rank and performance over 12 months are available on the site


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