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 with more weekly data. MDA Breakout returns following the Momentum Gauge® signals are still at 0% as we start the year with 3 weeks of negative signals.
Returns from 21 Weeks of Positive Momentum Gauge signals in 2021
Momentum Gauge® trading signal: Negative conditions ahead of Week 3
9 consecutive weeks of negative trading signals are shown below.
(Source: VMBreakouts.com) Red weekly color 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 157 weekly picks with over 100%+ gains, 65 picks over 200%+, 19 picks over 500%+ and 2 picks with over 1,000%+ gains since January 2019 such as:
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% with no trading in the first week.
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:
For 2021 the maximal average weekly returns are +10.27% for a total of 534.0% YTD maximal returns. Using the blind buy/hold approach and not following the Momentum Gauges® is delivering a minimal average -0.75% weekly return. The S&P 500 average weekly return is +0.50% YTD.
Market Momentum Conditions
You can sign up for the free private beta testing of the live Momentum Gauges® before the private beta ends. Customized Momentum Gauge® alerts via email or SMS are live this week.
The Momentum Gauges® closed at Negative 84 and Positive 78 at high negative levels well above 40. That both gauges have high values reflects the wide divergence in sectors between the most positive Energy and negative Healthcare sector.
The S&P 500 Momentum Gauges® of 500 mega/large-cap continues the most positive with a positive signal since December 22nd.
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.
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 3 – 2022 Breakout Stocks for next week are:
The picks consist of 4 Energy sector stocks as Energy continues the most positive momentum sector again this week. 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.
- Centennial Resource Development (CDEV) – Energy / Oil & Gas E&P
- Civitas Resources (CIVI) – Energy / Oil & Gas E&P
- Brigham Minerals (MNRL) – Energy / Oil & Gas E&P
- ProPetro Holding (PUMP) – Energy / Oil & Gas Equipment & Services
Civitas Resources – Energy / Oil & Gas E&P
Price Target: $64.00/share (See my FAQ #20 on price targets)
Civitas Resources, Inc. develops and produces crude oil, natural gas, and natural gas liquids in the Denver-Julesburg Basin, primarily located in Weld and Arapahoe Counties in Central Colorado. It operates on approximately 500,000 net acres with a production base of approximately 160,000 barrels of oil equivalent per day. The company was founded in 1999 and is headquartered in Denver, Colorado.
Source: Company resources
ProPetro Holding – Energy / Oil & Gas Equipment & Services
Price Target: $14.00/share (See my FAQ #20 on price targets)
ProPetro Holding Corp., an oilfield services company, provides pressure pumping and other related services. The company operates through Pressure Pumping and All Other segments. The company offers hydraulic fracturing, cementing, acidizing, and coiled tubing services. It serves the upstream oil and gas companies engaged in the exploration and production of North American unconventional oil and natural gas resources in the Permian Basin.
Source: Company resources
Top Dow 30 Stocks to Watch for Week 3
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|
|(HON)||Honeywell International, Inc.||+1.91%|
|(NASDAQ:CSCO)||Cisco Systems, Inc.||-1.35%|
|(MRK)||Merck & Co., Inc.||+7.52%|
|CSCO||Cisco Systems, Inc.||+5.45%|
|(IBM)||International Business Machines||+7.96%|
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 November selections up +15.4% and December up +11.8%. The +15.6% 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 with all 24 portfolios positive except for two.
The Dow pick for next week is:
Chevron Corporation (NYSE:CVX)
Chevron continues in strong positive momentum conditions with energy the most positive sector into January 2022. Analysts have upgraded in January with targets as high as $145/share. Institutions are net buyers and the indicators are all in positive breakout condition starting to reach overbought levels short term.
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.
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 investment decisions for the best results.
The final 2021 returns for the different portfolio models from January of last year are shown below. Leading portfolios for the first week of 2022 are Piotroski-Graham +9.65%, Negative Forensic +6.22%, Positive Forensic +1.81%, and the Premium Portfolio +2.70%.
All the very best to you, stay safe and healthy, and have a great week of trading!
JD Henning, PhD, MBA, CFE, CAMS