I would have liked to have posted this over the weekend, but… ok, I won’t make excuses. Better late than never. Considering the volatile market at the end of September, which ultimately ended with little change in either direction, breakout stocks fared quite well. In the period, there were a total of 30 breakouts from consolidation, with 21 ending the period with a gain. This was about in line with the number and success of rate in the first part of September.
As always, please click here for a much larger screenshot image of the top breakouts screen.
As far as specific industries, it was quite varied for the most part, but the clear winner was steel related stocks just as it was in the first part of September when 5 steel stocks broke out (although in the last 2 days they have all taken a beating). This time around, Quanex (NX), Cleveland Cliffs (CLF), Companhia Siderurgic (SID) and Posco (PKX) broke out of bases.
The biggest winner was Kongzhong Corp (KONG), the Chinese provider of wireless interactive entertainment, which ran up 15% soon after breaking out. The stock also happens to be the highest rated breakout (along with Gilead Sciences) for the period. The biggest loser was Resources Connection (RECN), which sold off after reporting earnings and ended the period down 4%.
Two stocks showing the greatest demand, as indicated by their DI Scores were Global Payments (GPN), an electronic transaction processing company AND Zygo Corp (ZIGO), a supplier of optical components and modules for the telecommunications and semiconductor industries. Both stocks are well out of a proper buy range though.
For more on the DI scores and other tracking data of SelfInvestors.com, you may like to have a look here.
I want to take a quick look at a couple of nice charts. First one is of Kongzhong (KONG), which broke out for a second time in the right side of its base and took off like a rocket (another leader in this space, Netease (NTES) has been doing the same). There are times when a stock will offer a couple of different buy points, so if you missed the first one, keep an eye on the stock for a pivot higher up in the base. .. and if you missed that, many stocks will pull back to the breakout point offering yet another chance. It pays to keep an eye on past breakouts. Also, notice the nice support at the 50 day moving average.
The wireless telecom stocks have been having a nice run and one of the nicest looking breakouts in this industry comes from Comtech Telecom (CMTL). Although the stock formed a nice looking, shallow, double bottom base, I wouldn’t have purchased on a break above the middle peak because the volume just wasn’t there. A high volume gap up above the handle formation offered a better entry point. The breakout remains healthy despite heavy selling in the market the past 2 days. These are the kinds of stocks you want to pay attention to because if the market turns around, it’s these stocks that will be the first to take off.