Breakoutwatch Weekly Summary 02/22/20
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|Breakout Gains for the Week Exceed
8% Despite Profit Taking
The week began strongly with the NASDAQ and other major indexes hitting new highs again on Wednesday but profit taking on Thursday and Friday left the three major indexes with losses for the week. The NASDAQ was the most affected with a loss of 1.6%. Despite the heavy selling on Thursday and Friday as evidenced by the above average volume levels, our trend indicators remain positive. Where we go from here, however, will be largely affected in the short term by the economic impact of the coronavirus. With the virus now affecting 28 countries and 1500 cases outside China, the effect on international travel and commerce will likely continue to depress markets already jittery about elevated valuation levels.
This weeks breakouts were equally split between cup and handle (CWH) and volatility squeeze patterns with 8 each. Average gains were substantial with 9% average for CWH and 8.4% for volatility squeeze. Of the 8 CWH breakouts, 2 were in a volatility squeeze within the handle. This combination is rare, but when it does occur, the breakout day "pop" is on average twice as high as a normal cup and handle breakout (6% compared to 3.1%). The momentum isn't maintained, however, and when we look at the average high within the next 7 and 30 days we see that the squeeze breakouts under-perform the non-squeeze breakouts.
|The purpose of this
section is to suggest how a profitable breakout could have been
probable from examining the charts on our watchlists.
In previous newsletters, I have suggested using a filter that selects stocks that have above average volume on the watchlist date and are also under accumulation:
This filter would have selected GFI from the CWH watchlist on 2/18. The stock broke out the next day and went on to gain 9.2% by Friday's close. As the chart shows the filter conditions were met and the handle was also in a volatility squeeze.
No new features this week
Our latest strategy suggestions are here.
|Brkout Date||Symbol||Base||Squeeze||Brkout Price||Brkout Day Close||RS Rank*||Last Close||Current % off BOP||Gain at Intraday High|
|*RS Rank on day before breakout.|
|CDMO||7.44||652,203||Avid Bioservices - Inc. - Common Stock||Biotechnology||94||7.18|
|ELF||20.00||1,178,391||e.l.f. Beauty - Inc. Common Stock||Household & Personal Products||91||19.07|
|DDD||12.56||2,838,072||3D Systems Corporation Common Stock||Computer Hardware||90||11.96|
|PRMW||15.50||1,649,716||Primo Water Corporation - Common Stock||Beverages - Non-Alcoholic||90||15.39|
|HABT||14.10||806,097||The Habit Restaurants - Inc. - Class A Common Stock||Restaurants||89||13.98|
|SNR||8.35||605,337||New Senior Investment Group Inc. Common Stock||REIT - Residential||87||8.29|
|AMKR||14.82||1,835,474||Amkor Technology - Inc. - Common Stock||Semiconductors||87||12.32|
|VGR||13.86||1,541,178||Vector Group Ltd. Common Stock||Tobacco||86||13.47|
|IBN||15.42||8,828,166||ICICI Bank Limited Common Stock||Banks - Regional||85||15.05|
|VSTO||10.27||867,513||Vista Outdoor Inc. Common Stock||Leisure||83||9.38|
|These stocks meet our suggested screening factors
for our Cup and Handle Chart Pattern watchlist.
See Revised Rules for Trading Cup and Handle Breakouts
|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 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.
|1 Week||13 Weeks||26 Weeks||Year-to-Date|
|1 Week||3 Weeks||13 Weeks||26 Weeks|
|Farm & Heavy Construction
|Farm & Heavy Construction Machinery
|Closed-End Fund - Debt
|Charts of each industry rank and performance over 12 months are available on the site|
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