Breakout Forecast Selections for Week 36:
Market conditions have generated a strong increase in positive breakout momentum and a decline negative momentum this week. The positive momentum gauge continues higher to 65 up from a value of 51 at the end of last week. The yellow positive momentum conditions signal momentum is getting stronger.
In Week 34 of last year, the positive momentum gauge set its all-time highest score of 120 since the momentum gauge has been put to use. The all-time low for the positive momentum selection gauge is 8 during week 14 of 2018
The negative momentum score remains low at 18 from a value of 21 last week.
Last published report: Week 35 Breakout Forecast
My momentum gauges are based on the count of the momentum stocks screened as either positive accelerating or negative accelerating stocks based on my research algorithm. The combination of the two different types of momentum categories screened by segments 2 and 6 of my algorithm may help validate the quality of the overall market momentum strength.
Total Return Chart: 94.18% new all-time high
Market fund flow update August 31st from ETF.com:
ETF inflows accelerated this week as fresh record highs in the U.S. stock market stoked investors’ animal spirits. A cool $9.8 billion flowed into U.S.-listed ETFs during the week ending Thursday, Aug. 30, pushing year-to-date inflows up to $172.9 billion.
The latest data, which comes from FactSet, showed the bulk of the weekly inflows going to U.S. equity ETFs—$8.3 billion. The S&P 500 leapt above 2,900 for the first time ever this week, peaking as high as 2,917 after the U.S. and Mexico secured a bilateral trade agreement.
Last week the selections gained 10% for the week with four out of eight stocks gaining more than +15.38% including Avid Bioservices (CDMO) ,one of the two sample stocks. This week I have selected eight breakout stocks from the following sectors: Seven healthcare and one technology.
The two sampled selections of positive momentum stocks for this week include:
- Aduro BioTech (ADRO) - Healthcare / Biotechnology
- Catalyst Pharmaceuticals (CPRX) - Healthcare / Drugs - Generic
Caution: These stocks are not necessarily recommended for long-term buy/hold unless you are comfortable with very large price swings. These are the most volatile selections I offer from among all the different Value and Momentum portfolios.
As I continue to observe, strong momentum events usually last from one to three weeks and may encounter some substantial decline before returning again to positive gains. Proposed entry points for each of the selected stocks are as close to the highlighted prices in yellow on the charts at market open.
Breakout Stock Selections for Week 36
Note: All breakout stocks are selected based on my algorithm to increase the frequency of 10% gains within a very short period of time. Price targets are estimated through an unrelated technical charting process for those who are looking for estimated exit points, however it's possible the momentum in these selections may move well beyond the initial target.
Sample #1: Aduro BioTech (ADRO) - Healthcare / Biotechnology Price Target: 9.00
|Aug-31-18 10:18AM||Aduro Biotech (ADRO) Up 17.4% Since Last Earnings Report: Can It Continue? Zacks|
|Aug-29-18 04:01PM||Aduro Biotech to Present at the 20th Annual H.C. Wainwright Global Investment Conference GlobeNewswire|
|Aug-29-18 07:50AM||Recent Analysis Shows Clearwater Paper, Aduro Biotech, Comtech Telecommunications, Ferroglobe, Badger Meter, and Donnelley Financial Solutions Market Influences Renewed Outlook, Key Drivers of GrowthGlobeNewswire|
|Aug-01-18 06:55PM||Aduro Biotech (ADRO) Reports Q2 Loss, Lags Revenue Estimates Zacks|
Aduro BioTech, Inc., an immunotherapy company, focuses on the discovery, development, and commercialization of therapies that transform the treatment of challenging diseases. The company is developing ADU-S100, which is in Phase I monotherapy study, as well as in Phase 1b combination study with an anti-PD1 immune checkpoint inhibitor; ADU-214 that is in Phase I clinical trials for the treatment of lung cancer; and ADU-741 for the treatment of prostate cancer.
Sample #2: Catalyst Pharmaceuticals (CPRX) - Healthcare / Drugs - Generic Price Target: 4.00
|Aug-30-18 06:51PM||Healthcare Wiz Mitchell Blutt Bets Big on These 3 Biotech StocksSmarterAnalyst|
|Aug-29-18 08:03AM||Catalyst Pharmaceuticals to Present at Rodman & Renshaws 20th Annual Global Investment Conference GlobeNewswire|
|Aug-22-18 07:03PM||Why Catalyst Pharmaceuticals (CPRX) Is a $6 Stock SmarterAnalyst|
|Aug-08-18 06:30AM||Catalyst Pharmaceuticals, Inc. to Host Earnings Call ACCESSWIRE|
2018 Chart: +52.99% YTD
Cumulative return with one-week holding period. New YTD high.
A detailed holding period analysis for Q1 2018 sampled Breakout Stocks is available here for review: Value & Momentum Breakout Stock Returns For Q1 2018
Top Gainers last four weeks: (SHSP) +33.24%, (INVE) +19.02%, (RUBI) +10.25%, (RIBT) +22.10%, (HTGM) +21.68%, (PACB) +16.05%, (PXLW) +37.41%, (CDMO) +18.83%, (MNOV) +17.47%, (ADAP) +15.43%, (MEET) +15.38%.
Long-Term Portfolio Returns
As a reminder of the other longer term portfolios being tracked and updated regularly with portfolio spreadsheets listed in the Tools section, here are the returns through Week 35.
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I think these breakout stocks will serve you well in Week 36 and beyond. I hope you all do well with these stocks and always diversify to minimize some of the market risks.
All the very best and have a great week of trading!
JD Henning, PhD, MBA, CFE, CAMS
Disclosure: I am/we are long AGEN, ARQL, CDMO, CMCM, ERII, FNJN, GRBK, IOTS, JBT, MEET, MEIP, PACB, SORL, TEUM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.