Last week, I celebrated 100 weeks of forward testing of this model here on Seeking Alpha.
The Weekly Breakout Forecast continues my doctoral research analysis on MDA breakout selections over more than 5 years. This subset of the different portfolios I regularly analyze has now reached 101 weeks of public selections as I look for more ways to improve the model even as I shrink the samples.
In 2017, the sample size began with 12 stocks, then 8 stocks in 2018, and now at members' request for 2019, I generate 4 selections each week. Remarkably, the frequency streak of 10% gainers within a 4 or 5 day trading week remains at highly statistically significant levels of 85 out of 101 weeks (84.16%). More than 150 stocks have gained over 10% in a 5-day trading week since this MDA testing began in 2017.
The CFO Insider Trading Anomaly series began for subscribers in April and has so far returned an average of +5.99% from the CFO purchases above a $5,000 significant cutoff value. GNTX +26.85% has generated the largest gains in April since the CFO transaction date.
Momentum Breakout Stock Portfolio 2019 results YTD
All time total return is now +76.41%
Risk Range Graph Skews Highly Positive
Cumulative Weekly Max Gain YTD: +123.91% (Best case)
Fixed Holding Period With No Reaction to News/Events: -4.52% (Worst case)
The evidence is strong that you can outperform the worst-case fixed 1-week, equal weighted minimum return measurement shown above in the 1 Week Close (blue line). The best results are now coming from longer term holding periods beyond one-week. This is showing a return to prior patterns in 2017 and 2018 where a fixed three and four-week holding pattern became the optimal period as more data was acquired.
As I always tell traders, don't fixate on holding periods or arbitrary price targets. The best gains are made by monitoring the conditions of the indicators that signaled a strong buy in the first place and hold as long as these buy conditions remain intact.
Through the third week of April, Monday and Friday have remained the best days of the week.
(Source: Value & Momentum Breakouts)
Now with 64 stocks selected into 2019, the average top gain within 5 days has been +7.89%.
Momentum conditions remain strongest among these prior breakout stocks YTD: FinJan Holdings (FNJN) +10.32%, Keane Group (FRAC) +23.17%, Daseke (DSKE) +26.51%, FormFactor (FORM) +22.42%, Patterson-UTI Energy (PTEN) +18.78%, Qudian (QD) +13.79%, PPDAI Group (PPDF) +25.12%, YETI Holdings (YETI) +36.28%, Pixelworks (PXLW) +18.83%, Baozun (BZUN) +0.43%, Noah Holdings (NOAH) +6.04%, BEST, Inc. (BEST) +7.75%, and the current set of Week 17 Breakout stocks.
Positive momentum parameters have dropped significantly through the short trading week this last week, with negative momentum levels reaching a high of 43 in Week 16 Breakout. The spread between Positive/Negative values has been closing the two measures quickly and signalling market weakness ahead of next week. We have seen how the overextended condition of high positive levels and a wide gap between low negative levels have preceded a higher probability of pull-back potential in subsequent weeks.
(Source: Value & Momentum Breakouts)
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 17 - 2019 Breakout Stocks for next week are:
The two Breakout Stocks to start the week consist of two services sector stocks:
- Echo Global Logistics (ECHO) - Services/Trucking
- Jumei International Holding Limited (JMEI) - Services/Specialty Retail
Echo Global Logistics - Services/Trucking
Price Target: 28.00
|Apr-17-19 04:01 PM||Echo Global Logistics Launches EchoDrive, a Carrier App and Web Portal with Access to Echo's Private Load Board, on New EchoAccelerator Platform PR Newswire|
|Apr-17-19 10:32 AM||Echo Global Logistics (ECHO) Expected to Beat Earnings Estimates: What to Know Ahead of Q1 Release Zacks|
|Apr-08-19 04:01 PM||Uber Freight, Convoy Rise As Traditional Load Boards Lose Market Share Benzinga|
|Apr-08-19 04:01 PM||Echo Global Logistics First Quarter 2019 Earnings Release and Conference Call Scheduled for Wednesday, April 24, 2019 GlobeNewswire|
Echo Global Logistics, Inc. provides technology-enabled transportation and supply chain management solutions in the United States. It utilizes a proprietary technology platform to compile and analyze data from its multi-modal network of transportation providers for the transportation and logistics needs.
Jumei Intl Holding LTD - Services/Specialty Retail
Price Target: 3.20
|Apr-17-19 04:25 PM||BRIEF-Bank Of Gansu To Appoint Hao Jumei As Vice President Reuters|
Jumei International Holding Limited operates as an online retailer of beauty products in the People's Republic of China. The company offers beauty products, such as cosmetics, skin care, cosmetic applicators, fragrance, and body care products; and beauty products for men, and baby and children.
Top 2 Dow 30 Stocks to Watch for Week 17
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 prior picks:
American Express Company (AXP)
Indicators are all strongly positive with breakout conditions ready to break through the 114/share resistance line for the third try. A strong move above 115/share will take the price momentum to 52-week highs and substantial gains in the short term.
McDonald's Corporation (MCD)
Selected previously, MCD remains a strong breakout continuation stock with indicators and net inflows rising, but not yet in overbought levels. New 52-week high has cleared prior resistance levels and growth prospects are showing positive sentiment across all the indicators.
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 include one-year buy/hold value stocks.
All the very best to you and have a great week of trading!
JD Henning, PhD, MBA, CFE, CAMS
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.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within 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.