Week 12 Breakout Forecast: Short-Term Picks To Give You An Edge

|
Includes: ABEO, AKBA, AQMS, DSKE, ESTE, FNJN, FORM, JPM, MCD, RIGL, TTGT, TZOO, WTI, YETI
by: JD Henning
Summary

Two sample breakout stocks for Week 12 with better than 10% short-term upside potential. YETI gained +24.80% last week.

Two Best of the Dow 30 for mega-cap selections this week: McDonald's Corporation and JPMorgan.

From inception now makes it 82 out of 96 trading weeks (85.41%) with at least one stock move 10% or greater within four or five days.

Total returns for the Breakout Stock selections since 2017 are +80.16% compared to +20.29% for the S&P 500 over the same trading period.

The Week 12 - Breakout Stocks for Next Week

The two Breakout Stocks to start the week consist of one healthcare and one technology sector stock.

  1. Rigel Pharmaceuticals (RIGL) - Healthcare Biotechnology
  2. Travelzoo (TZOO) - Technology/Internet Information Providers

Rigel Pharmaceuticals - Healthcare Biotechnology

Price Target: 3.00

FinViz

Mar-12-19 12:17PM Is Rigel Pharmaceuticals, Inc.'s CEO Overpaid Relative To Its Peers? Simply Wall St.
Mar-06-19 12:32AM Edited Transcript of RIGL earnings conference call or presentation 28-Feb-19 10:00pm GMT Thomson Reuters StreetEvents
Mar-01-19 09:18AM Rigel Pharmaceuticals Q4 2018 Earnings Conference Call Transcript Motley Fool
Feb-28-19 04:01PM Rigel Reports Fourth Quarter and Full Year 2018 Financial Results and Provides Company Update PR Newswire

Rigel Pharmaceuticals, Inc., a biotechnology company, engages in the discovery and development of small molecule drugs for the treatment of immune and hematologic disorders, cancer, and rare diseases. The company's clinical programs include Tavalisse, an oral spleen tyrosine kinase inhibitor for the treatment of adult patients with chronic immune thrombocytopenia, and Phase III clinical study for autoimmune hemolytic anemia.

Travelzoo - Technology/Internet Information Providers

Price Target: 18.00

Mar-08-19 12:47PM Only U.S. Listed Company with an 80% Female Board Shows a 54% Increase in Average Share Price PR Newswire
Mar-07-19 09:03AM Can You Imagine How Travelzoo's Shareholders Feel About The 97% Share Price Increase? Simply Wall St.
Mar-06-19 06:37AM Travelzoo's Global Head of Brand, Sharry Sun, to Present Consumer Survey on "Overcrowding" at ITB Berlin PR Newswire
Feb-27-19 04:15AM Travelzoo Celebrates the Successful Debut of its Global Sustainability Campaign PR Newswire
Feb-18-19 12:50PM Travelzoo Is Employing Capital Very Effectively Simply Wall St.

Travelzoo Inc., together with its subsidiaries, provides travel, entertainment, and local deals from travel and entertainment companies, and local businesses in the Asia Pacific, Europe, and North America. The company's publications and products include Travelzoo Websites; Travelzoo iPhone and Android applications; Travelzoo Top 20 email newsletter; and Newsflash email alert service.

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.

Breakout Stock Portfolio Total Return +80.16%

The total all-time return of the Breakout Stock picks (worst case) using a fixed five-day equal weighted buy/hold return period is shown in the waterfall chart above. These picks are measured as a fixed baseline for worst-case scenario since this model began in 2017.

Breakout Stock Portfolio 2019 results YTD

Examining the returns for this model YTD for 2019 yields the following results:

Cumulative Weekly Max Gain YTD: +94.59% (Best case)

Cumulative Gain by Friday of the Week: -0.77% (Worst case) No adjustments for earnings surprises, events, or technical changes during the week.

(Source: Value & Momentum Breakouts)

The evidence is strong that you can outperform the worst-case, fixed, one-week, equal-weighted, minimum return measurement shown above in the 1 Week Close (blue line). Selling many of the breakout selection gains prior to Friday has resulted in +94.59% return YTD (green line) best case.

From the eight most recent selections, the best returns were achieved in fewer than four days with an average top gain of 9.38% per stock. Idiosyncratic events will occur that the model cannot anticipate (e.g. earnings surprise, CEO resignation, SEC investigation, etc.), so it is always a good strategy to hold a basket of stocks to diversify unpredictable risks.

Above-average momentum continues in prior weekly breakout selections: YETI Holdings (YETI), Abeona Therapeutics (ABEO), W&T Offshore (WTI), Akebia Therapeutics (AKBA), Earthstone Energy (ESTE), Aqua Metals (AQMS), FormFactor (FORM), TechTarget (TTGT), Daseke (DSKE), and Finjan Holdings (FNJN).

Momentum values have improved significantly during the past five days. Conditions are still below the 100 positive momentum value, but rebounding very well to the S&P 500 change line (yellow). Conditions have returned to a more favorable outlook based on Fed policy updates and positive macroeconomic conditions. The S&P 500 has held above the critical 2,800 level and may encourage more investors to get off the sidelines for new potential market highs.

(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.

Top 2 Dow 30 Stocks to Watch for Week 12

Applying the same breakout model parameters without regard to market cap or the below-average volatility of mega-cap stocks may produce strong breakout 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 can provide some strong additional basis for investors to judge future momentum performance for mega-cap stocks in the short- to medium-term. The top two stocks based on the same published breakout parameters for this week are:

McDonald's Corporation (MCD)

All the indicators are in positive breakout conditions with positive net inflow and a likely retest of 190/share resistance level in the short-term.

(Source: FinViz)

JPMorgan Chase & Co. (JPM)

Price has broken out above the negative price channel from September with all technical indicators in strong positive breakout condition. Very good setup for price move above 110/share and higher short-term.

All of these key weekly and monthly selections feed into the Premium Portfolio database selection model portfolio that is now up 25.18% YTD with 28 stocks gaining more than 10% and as much as 66.21% since January.

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

JD Henning, PhD, MBA, CFE, CAMS

Disclosure: I am/we are long RIGL. 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.

Additional disclosure: I may initiate additional positions as early as Monday.