Breakoutwatch Weekly Summary 11/02/19

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Weekly Commentary
NASDAQ and S&P 500 Set New Record Highs. Volatility Squeeze Breakouts most Successful

Another quarter point rate cut by the Fed and better than expected employment figures lifted the NASDAQ and S&P 500 to new highs on Friday. The NASDAQ gained a healthy 1.7% for the week leading the S&P at 1.5% and the DJI at 1.4. While the outlook is bullish, potentially still threatening the ongoing rally is the long awaited trade deal with China. Conflicting comments from the two sides to the deal, pessimism by China and optimism from the US, mean a substantive deal may still be some way off.

Volatility Squeeze breakouts led the cup and handle pattern in both quantity and average return.

If you are not familiar with the Volatility Squeeze pattern, see the Strategy Suggestions area below.


New Features this Week

No new features this week
Strategy Suggestions
Our latest strategy suggestions are here.

Volatility Squeeze

A "Volatility Squeeze" occurs when the volatility of a stock falls below its recent levels. A fall in volatility usually means that the stock is in a period of consolidation and trending in a narrow range. When that period of consolidation ends, normal volatility will return resulting in a breakout to the upside or downside. If we can recognize a volatility squeeze situation, then we have the opportunity to place a long or short position order and profit from the breakout.

A Volatility Squeeze has usually been recognized by a narrowing of the Bollinger Bands. While this method has its merits, it lacks the objectivity necessary to provide a robust, objective, quantifiable trading strategy, We have developed a refinement of the methodology which allows objective identification of a Volatility Squeeze, We detect a "squeeze" when the 2 standard deviation Bollinger Band (BB) narrows to within the Keltner Channel (KC). Bollinger Bands are very susceptible to volatility changes while Keltner Channels are a smoother, trend following, indicator. Consequently, the narrowing of the BB to within the KC gives us a convenient means of algorithmically recognizing a drop in volatility.

While the BB are within the KC, we say the "squeeze is on". For trading purposes, we are interested in the moment when the squeeze comes off, meaning that the upper and lower BB move outside the KC again, which signals a breakout. Of course, the breakout can be to the upside or downside, but for our Squeeze watchlist we are interested only in breakouts to the upside.

A squeeze can occur while a stock is trending up or down. For our squeeze watchlist, we are only concerned with stocks trending up.

Breakouts Summary by Watchlist for Week Beginning 10/28/19
List Breakouts Avg. Gain
CWH 6 3.45
SQZ 8 5.83
Breakouts Detail for Week Beginning 10/28/19
Brkout Date Symbol Base Squeeze Brkout Price Brkout Day Close RS Rank* Last Close Current % off BOP Gain at Intraday High
2019-10-28 DCPH SQZ y 36.07 39.07 98 45.46 26.03% 26.25%
2019-10-31 CSGS SQZ y 52.23 57.64 90 56.45 8.08% 11.53%
2019-10-29 AMGN CWH n 206.06 208.99 84 217.95 5.77% 6.46%
2019-11-01 SYNA CWH n 42.88 45.04 86 45.04 5.04% 5.71%
2019-10-29 VRRM SQZ y 14.29 14.38 80 15 4.97% 5.25%
2019-10-31 CASY SQZ y 165.83 170.81 85 172.58 4.07% 5.22%
2019-10-29 NXPI CWH y 113.50 114.41 82 118 3.96% 4.45%
2019-11-01 NWL CWH n 20.00 20.6 91 20.6 3% 4%
2019-11-01 VECO CWH n 13.98 14.35 91 14.35 2.65% 4.65%
2019-10-31 GOOD SQZ y 23.20 23.56 84 23.67 2.03% 3.36%
2019-11-01 INOV SQZ y 15.64 15.9 87 15.9 1.66% 1.85%
2019-10-29 OMAB CWH n 54.64 55.92 82 54.78 0.26% 3.35%
2019-10-28 TTD SQZ y 202.63 209.97 82 203.1 0.23% 6.92%
2019-10-29 PRFT SQZ y 39.27 41.21 93 39.11 -0.41% 6.49%
*RS Rank on day before breakout.
Top Rated Cup and Handle Stocks as of Friday November 01, 2019
Symbol BO
Company Industry RS
APPS 7.78 2,770,624 Digital Turbine - Inc. Software - Application 99 7.04
MNTA 15.99 613,474 Momenta Pharmaceuticals - Inc. Drug Manufacturers - Specialty & Generic 91 15.74
GLDD 11.11 623,892 Great Lakes Dredge & Dock Corporation Engineering & Construction 91 10.76
SBLK 11.81 912,790 Star Bulk Carriers Corp. - Common Shares Shipping & Ports 86 11.05
ASUR 9.33 634,692 Asure Software Inc Software - Application 85 9.16
PSDO 16.96 1,448,661 Presidio - Inc. Information Technology Services 81 16.58
These stocks meet our suggested screening factors for our Cup and Handle Chart Pattern watchlist.
See Revised Rules for Trading Cup and Handle Breakouts
Major Index Summary
Index Value Change Week Change YTD Trend1
Dow 27347.4
1.44% 17.23% Up
NASDAQ 8386.4
1.74% 26.39% Up
S&P 500 3066.91
1.47% 22.34% Up
1The Market Trend is derived from our proprietary market model. The market model is described on the site here.
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
NASDAQ Composite
1.74 %
NASDAQ Composite
4.6 %
S&P 500
4.12 %
NASDAQ Composite
26.39 %
Best Performing Industry
1 Week 3 Weeks 13 Weeks 26 Weeks
Water Utilities
Water Utilities
Diversified Utilities
Insurance Brokers
Most Improved Industry (by change in technical rank2)
Publishing - Books
Department Stores
Movie Production - Theaters
Publishing - Books
Charts of each industry rank and performance over 12 months are available on the site


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