With the market staging a rally in the last half of July, the number of breakouts picked up significantly and the success rate was much higher. New leaders are emerging in banking, telecom and health/drug related issues as the market tries to pull itself out of the correction. Oil stocks also continue to do well as most continue to report record profits.
IN the last half of July, there were total of 41 breakouts tracked in the SelfInvestors.com Breakout Tracking database, with 22 finishing the period with a gain, 2 with no gain and 11 with a loss. Just 2 stocks dropped 8% or more, indicating a failed breakout. That’s a darn good success rate. If you were in oil and banking stocks you did well at the end of the month, with about half of the breakouts occurring in these industries (10 in banking, 8 in oil).
The biggest breakouts, with gains of 18% from the breakout occurred in Grupo Simec (SIM), a Mexican steel producer; Datalink Corp (DTLK), a data storage solutions provider and Flag Financial (FLAG), a small bank holding company providing banking, mortgage, investment and insurance services. The biggest loser was no contest – Baidu.com (BIDU) plummeted 27% during the period and is currently testing support of its 200 day moving average.
Below is a screenshot of the database with shows the top 8 breakouts for the last 2 weeks of July. Please click here to see the larger image.
The top 2 highest rated breakouts for the period just happen to remain in a buyable range (although technically Gilead Sciences should get a new pivot point sine the break above the handle on 7/26 was with weak volume). It would provide a nice entry on a break from current consolidation above 63. The top breakout in the period was once again a bank stock! If you haven’t had a chance you may like to see the last Breakout Highlights report, in which I highlighted one of the highest rated bank stocks in the database – Cascade Bancorp (CACB). It’s currently well extended past a proper buy point, but may consolidate soon.
Let’s have a look at the charts of a couple top ranked breakouts – Gilead Sciences (GILD) and Bancorp (TBBK).
TBBK first broke out on July 19th and it looked like at the time it would be off to the races like other high quality bank stocks.. but the very next day it reversed course and has been meandering quietly since. I thought that its earnings report yesterday would be more of a catalyst for movement in either direction, but it continues trade quietly. Although it remains in a buyable range and above key support of the 50 day moving average, I’d be hesitant to initiate a position here before the next Fed meeting. I"m holding off on this one until after the Fed meeting unless it stages a big high volume move out of this consolidation before then.
You see the first breakout attempt with poor volume, so a purchase there should have been avoided. GILD is a great company and has formed a decent looking base, but it’s a bit on the severe side in the left of the base.. I would probably avoid this one at the breakout unless it was showing volume at least double the average.