Week 6 Breakout Forecast: Short-Term Picks To Give You An Edge

by: JD Henning

Two new breakout stocks for Week 6 with better than 10% short-term upside potential.

Two Best of the Dow 30 mega-cap selections based on breakout model characteristics are Chevron Corp and Intel Corp.

Continuing from last year now makes it 76 out of 90 trading weeks (83.52%), with at least one stock move 10% or greater within a 4 or 5 day trading.

Total returns for the Breakout Stock selections since 2017 is 76.16% compared to 16.20% for the S&P 500 over the same trading period.

Breakout Stock Portfolio 2019 results YTD

Cumulative Weekly Max Gain YTD: +34.76%

Cumulative Gain by Friday of the Week: -1.97%

We are still seeing that selling the breakout stocks prior to the end of the fixed 5-day measurement period is the most profitable 1 week strategy. Also as I monitor results for optimal holding periods over multiple weeks on the Breakout Stock spreadsheet for members, I am seeing that the two-week hold through the following Thursday is currently generating the best overall results as positive momentum conditions carry well into second and third weeks.

(Source: Value & Momentum Breakouts)

The evidence is strong that you can outperform the fixed 1-week, equal weighted minimum return measurement shown above in the 1 Week Close {blue line}. Selling many of the selections prior to Friday has resulted in +34.76% return YTD {green line} compared to the S&P 500 +8.41% for the same period.

So far the returns above represent a distinct pattern among traders in high momentum volatility breakout selections who are exiting positions ahead of the fixed Friday close for the week. As the table shows below for the past 8 selections for 2019 so far the best returns were generally achieved in fewer than four days with an average top gain of 5.44% per stock.

(Source: Value & Momentum Breakouts)

Momentum conditions remain strongest among TechTarget (TTGT), FormFactor (FORM), Roan Resources (ROAN), Keane Group (FRAC), Youngevity International (YGYI), eXp World Holdings (EXPI), Finjan Holdings (FNJN) and ChemoCentryx (CCXI) in the prior weekly selections.

Momentum parameters have continued to remain positive from Week 5 Breakout Selections. For Week 6 the selections begin the week with Momentum values at 66 Positive and 9 Negative. These are some of the highest positive and lowest negative momentum levels we have seen on this gauge since early 2018. The Portfolio Barometer index shows that momentum portfolio selections are still among the best performs through January. (Source: Value & Momentum Breakouts Dashboard)

Using the signals of the Momentum Gauge may significantly improve your returns in 2019. 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 70 on the gauge.

The Week 6 - 2019 Breakout Stocks for next week are:

The two Breakout Stocks to start the week consist of 2 healthcare stocks:

  1. Marinus Pharmaceuticals (MRNS) - Healthcare / Biotechnology
  2. Sangamo Therapeutics (SGMO) - Healthcare / Biotechnology

Marinus Pharmaceuticals (MRNS) - Healthcare / Biotechnology

Price Target: 5.00 (Source: FinViz)

Jan-30-19 07:35AM New Research Coverage Highlights Heron Therapeutics, IDACORP, Star Bulk Carriers, AngioDynamics, Marinus Pharmaceuticals, and Advaxis Consolidated Revenues, Company Growth, and Expectations for 2019 GlobeNewswire
Jan-25-19 04:00PM Marinus Pharmaceuticals Announces Inducement Grants Under NASDAQ Listing Rule 5635(C)(4) GlobeNewswire

Marinus Pharmaceuticals, Inc., a biopharmaceutical company, focuses on developing and commercializing therapeutics to treat epilepsy and neuropsychiatric disorders. Its clinical stage product candidate, ganaxolone, is an allosteric modulator of GABAA, developed in three different dose forms: intravenous (IV), capsule, and liquid. The multiple dose forms are intense to maximize the therapeutic range of ganaxolone for adults and pediatric patients. Ganaxolone acts as an anti-seizure, anti-anxiety, and anti-depressive actions; and acts on synaptic and extra synaptic GABAA receptors.

Sangamo Therapeutics (SGMO) - Healthcare / Biotechnology Price Target: 16.00

(Source: FinViz)

Feb-01-19 08:30AM Sangamo Therapeutics To Host Conference Call To Review Interim Results From Phase 1/2 CHAMPIONS And EMPOWERS Studies For MPS II And MPS I PR Newswire
Jan-29-19 07:45AM Investor Expectations to Drive Momentum within Dollar General, Zayo Group, Cabot Oil & Gas, Sangamo Therapeutics, BioTelemetry, and Dean Foods Discovering Underlying Factors of Influence GlobeNewswire
Jan-24-19 09:35AM Is Sangamo Therapeutics, Inc.s (NASDAQ:SGMO) CEO Salary Justified? Simply Wall St.

Sangamo Therapeutics, Inc. focuses on translating science into genomic therapies that transform patients' lives using platform technologies in genome editing, gene therapy, gene regulation, and cell therapy. The company's zinc finger DNA-binding protein (ZFP) technology enables specific genome editing and gene regulation.

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 & Momentum portfolios. Entry price points are highlighted in yellow as a general point of entry as market conditions allow in the next trading session. Members of my service receive these selections prior to the close on Friday.

Top 2 Dow 30 Stocks to Watch for Week 6

Applying the same breakout model parameters without regard to market cap or the below average volatility of mega-cap stocks may produce similar strong results relative to other Dow 30 stocks.

While I don't expect Dow stocks to outperform typical breakout stocks over the measured 5 day breakout period, it can provide some strong additional basis for investors to judge future performance for mega-cap stocks in the short to medium term. The top 2 stocks based on the same published breakout parameters for this week are:

Chevron Corporation (CVX)

(Source: FinViz)

Intel Corporation (INTC) (Source: FinViz)

All of these key weekly and monthly selections feed into the Premium Portfolio database selection model portfolio that is now up 16.32% YTD

All the very best to you and have a great week of trading!

JD Henning, PhD, MBA, CFE, CAMS

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in AQMS, MRNS, PTEN, SGMO over the next 72 hours. 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.