Introduction
The Weekly Breakout Forecast continues my doctoral research analysis on MDA breakout selections over more than 7 years. This subset of the different portfolios I regularly analyze has now reached over 240 weeks of public selections as part of this ongoing live forward-testing research.
In 2017, the sample size began with 12 stocks, then 8 stocks in 2018, and at members’ request since 2020, I now generate 4 selections each week, 2 Dow 30 picks, and new portfolios for ETF/ETNs and monthly Growth & Dividend MDA breakout stocks. I offer 11 top models of short and long term value and momentum portfolios that have beaten the S&P 500 since my trading studies were made public:
Charts and tables will restart for 2022 when we get at least one positive trading signal week. MDA Breakout returns are still at 0% following the Momentum Gauge® signals and avoiding the worst start to the stock market since 1939. Best to follow the signals as we enter February with 4 weeks of negative signals in January and 11 consecutive weeks of negative signals since November. February is historically the second worst month of the year for the S&P 500 on average since 1927. We have had no positive weekly signals so far in 2022 and last year there were only 21 positive trading weeks:
Returns from 21 Weeks of Positive Momentum Gauge signals in 2021
Momentum Gauge® trading signal: Negative conditions ahead of Week 5
January 2022 has been the worst start of stock market since 1939. We have had 11 consecutive weeks of negative gauge signals since November as shown below in red. Readers should consider the Momentum Gauge Topping signal article: Momentum Gauge Topping Signal: The First Negative Signal In 2022
Red weekly color the last 10 weeks shows how poorly market momentum and investor enthusiasm sustains through the week when the negative Momentum Gauges® are above 40. This was an especially strong factor in 2021 showing cumulative returns with and without the signal.
Historical Performance Measurements
The MDA Breakout minimal buy/hold returns are at +70.5% YTD when trading only in the positive weeks consistent with the positive Momentum Gauges® signals. Remarkably, the frequency streak of 10% gainers within a 4- or 5-day trading week continues at highly statistically significant levels above 80% not counting frequent multiple 10%+ gainers in a single week.
Longer term many of these selections join the V&M Multibagger list now up to 129 weekly picks with over 100%+ gains, 50 picks over 200%+, 15 picks over 500%+ and 2 picks with over 100%+ gains since January 2019 such as:
- Trillium Therapeutics (TRIL) +1008.7%
- Intrepid Potash (IPI) +1,000.59%
More than 200 stocks have gained over 10% in a 5-day trading week since this MDA testing began in 2017. A frequency comparison chart is at the end of this article. Readers are cautioned that these are highly volatile stocks that may not be appropriate for achieving your long term investment goals: How to Achieve Optimal Asset Allocation
2022 Breakout Portfolio Returns
While in negative Momentum Gauge® conditions the current measured returns for 2022 are at 0% by following the signals and avoiding the record market downturns.
The Breakout Picks are high volatility selections for short-term gains, but with no selections below $2/share, under 100k average daily volume, or less than $100 million market cap. Prior returns are documented here:
2022 marks the worst start to the stock market since 1939 and the Momentum Gauge® signals have been negative for 11 consecutive weeks since Week 46. It is best to follow the signals and avoid momentum stocks until conditions turn positive.
Market Momentum Conditions
The Momentum Gauges® closed at Negative 157 and Positive 24 at high negative levels well above 40. Readers should consider the Momentum Gauge Topping signal article: Momentum Gauge Topping Signal: The First Negative Signal In 2022
The S&P 500 Momentum Gauges® continue negative at Negative 50 and Positive 13. Readers should consider the Momentum Gauge Topping signal article: Momentum Gauge Topping Signal: The First Negative Signal In 2022
The Weekly Momentum Gauges® based on the broad 7,500+ stocks are back in negative conditions in a longer bearish signal. Negative weekly values remain high and we have had 10 out of the last 11 weeks negative.
Two conditional signals that are very important to watch:
- Avoid/Minimize trading when the Negative score is higher than the Positive momentum score.
- Avoid/Minimize trading when the Negative score is above 40 on the gauge.
The Week 5 – 2022 Breakout Stocks for next week are:
The picks consist of 2 Financial, 1 Consumer Cyclical and 1 Industrial sector stocks. These stocks are released to members in advance every Friday morning near the open. Prior selections may be doing well, but for research purposes I deliberately do not duplicate selections from the prior week. These selections are based on MDA characteristics including strong money flows, positive sentiment, and fundamentals — but readers are cautioned to follow the Momentum Gauges® for the best results.
- Genco Shipping & Trading Ltd. (GNK) – Industrials / Marine Shipping
- Visa Inc. (V) – Financial / Credit Services
Genco Shipping & Trading Ltd. – Industrials / Marine Shipping
Price Target: $20.00/share (See my FAQ #20 on price targets)
(Source: FinViz)
Genco Shipping & Trading Limited, together with its subsidiaries, engages in the ocean transportation of dry bulk cargoes worldwide. The company, through the ownership and operation of dry bulk carrier vessels, transports iron ore, coal, grains, steel products, and other dry-bulk cargoes.
Visa Inc. – Financial / Credit Services
Price Target: $260.00/share (See my FAQ #20 on price targets)
(Source: FinViz)
Visa Inc. operates as a payments technology company worldwide. The company facilitates digital payments among consumers, merchants, financial institutions, businesses, strategic partners, and government entities. It operates VisaNet, a transaction processing network that enables authorization, clearing, and settlement of payment transactions.
Top Dow 30 Stocks to Watch for Week 5
First, be sure to follow the Momentum Gauges® when applying the same MDA breakout model parameters to only 30 stocks on the Dow Index. Second, these selections are made without regard to market cap or the below-average volatility typical of mega-cap stocks that may produce good results relative to other Dow 30 stocks.
While I don’t expect Dow stocks to outperform typical breakout stocks over the measured five-day breakout period, it may provide some strong additional basis for investors to judge future momentum performance for mega-cap stocks in the short- to medium-term. The most recent picks of weekly Dow selections in pairs for the last 5 weeks:
Symbol | Company | Current % return from selection Week |
(TRV) | The Travelers Companies | +0.32% |
(PG) | The Procter & Gamble Company | -1.72% |
(CVX) | Chevron Corporation | +2.18% |
(WMT) | Walmart Inc. | -5.15% |
(CAT) | Caterpillar Inc. | -9.79% |
(HON) | Honeywell International, Inc. | -5.42% |
(INTC) | Intel Corporation | -7.32% |
(DOW) | Dow Inc. | +5.85% |
(CSCO) | Cisco Systems, Inc. | -10.59% |
DOW | Dow Inc. | +8.89% |
If you are looking for a much broader selection of mega-cap breakout stocks beyond just 30 Dow stocks with more detailed analysis and strong returns I would recommend the Growth & Dividend MDA Breakout picks.
These picks are released monthly for long term total return with strong returns that are leading the S&P 500 by +9.96% through 2022. The +7.82% average weighted monthly returns do not include the large dividends above 2%+ for every stock. The 2-year returns of the portfolios are shown below:
The February selections will be released shortly.
The Dow pick for next week is:
Apple Inc. (AAPL)
Apple beat on Q4 earnings this week with early setup for a run back to the top of the channel around 200/share. Analyst consensus target is around 180/share with high end estimates of 210/share. Watch for more indicators to turn positive as net MFI inflows are starting to improve again.
Background on Momentum Breakout Stocks
As I have documented before from my research over the years, these MDA breakout picks were designed as high frequency gainers.
These documented high frequency gains in less than a week continue into 2020 at rates more than four times higher than the average stock market returns against comparable stocks with a minimum $2/share and $100 million market cap. The enhanced gains from further MDA research in 2020 are both larger and more frequent than in previous years in every category. ~ The 2020 MDA Breakout Report Card
The frequency percentages remain very similar to returns documented here on Seeking Alpha since 2017 and at rates that greatly exceed the gains of market returns by 2x and as much as 5x in the case of 5% gains.
(Value & Momentum Breakouts)
The 2021 and 2020 breakout percentages with 4 stocks selected each week.
MDA selections are restricted to stocks above $2/share, $100M market cap, and greater than 100k avg daily volume. Penny stocks well below these minimum levels have been shown to benefit greatly from the model but introduce much more risk and may be distorted by inflows from readers selecting the same micro-cap stocks.
Conclusion
These stocks continue the live forward-testing of the breakout selection algorithms from my doctoral research with continuous enhancements over prior years. These Weekly Breakout picks consist of the shortest duration picks of seven quantitative models I publish from top financial research that also include one-year buy/hold value stocks. Remember to follow the Momentum Gauges® in your investing decisions for the best results.
Nearly all the portfolio types are beating the S&P 500 into 2022. Leading portfolios are Piotroski-Graham +5.82%, Negative Forensic -1.84%, Growth & Dividend +2.95%, Premium Portfolio +1.55%, and the new active ETF portfolio +22.12%. The final 2021 returns for the different portfolio models from January of last year are shown below.
All the very best to you, stay safe and healthy and have a great week of trading!
JD Henning, PhD, MBA, CFE, CAMS
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