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 102 weeks of public selections as part of this ongoing live forward-testing.
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 102 weeks (83.33%). 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 is quickly demonstrating statistically significant positive returns. A separate article on the first month of strong performance will be out soon.
Momentum Breakout Stock Portfolio 2019 results YTD
All time total return is now +75.59%
Risk Range Graph Skews Highly Positive
Cumulative Weekly Max Gain YTD: +132.20% (Best case)
Fixed Holding Period With No Reaction to News/Events: -4.16% (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 good as these results may be, the Premium Portfolio for members is outperforming the Weekly Breakout stocks in every month so far into 2019. This portfolio relies on some of the same breakout stocks for its returns as well as stocks from each of the top quantitative portfolios and with longer holding periods. As I always tell traders, don't fixate on holding periods or arbitrary price targets offered by analysts with no clear time horizon. 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 fourth week of April, Monday and Friday have remained the best days of the week by far, accounting for 82% of the gains in April.
(Source: Value & Momentum Breakouts)
Momentum conditions remain strongest among these prior breakout stocks YTD: ChemoCentryx (CCXI) +20.26%, Daseke (DSKE) +27.47%, FormFactor (FORM) +26.48%, Marinus Pharmaceuticals (MRNS) +39.83%, CymaBay Therapeutics (CBAY) +37.78%, Cara Therapeutics (CARA) +14.63%, AcelRx Pharmaceuticals (ACRX) +35.90%, PPDAI Group (PPDF) +35.95%, Qudian (QD) +11.03%, MEI Pharma (MEIP) +7.58%, YETI Holdings (YETI) +46.29%, Travelzoo (TZOO) +28.41%, Energy Recovery (ERII) +5.78%, Pixelworks (PXLW) +17.30%, Baozun (BZUN) +8.82%, Aratana Therapeutics (PETX) +23.14%, and the current set of Week 18 Breakout stocks -- several of which are also in the Premium Portfolio.
Positive momentum parameters have dropped significantly again after reaching a high of 83 early in the week. The current downward trend and steadily increasing negative momentum levels over the last few weeks suggests the market may be running low on sustaining momentum conditions even as the indexes are reaching new highs. The spread between Positive / Negative values has been closing the two measures more frequently lately and possibly signalling market weakness ahead for next week.
(Source: Value & Momentum Breakouts)
Next week marks a significantly large scheduled Fed Reserve asset rolloff event as I have written and discussed at length with readers. These events have had significant correlation with VIX volatility events. The full Fed Schedule is listed in the appendix at the end of this article.
Using the signals of the Momentum Gauge may significantly improve your returns in 2019 and protect your investments. 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 18 - 2019 Breakout Stocks for next week are:
The two Breakout Stocks to start the week consist of one technology stock, and one consumer goods sector stock:
- The Meet Group (MEET) - Technology / Internet Information Providers
- SunOpta (STKL) - Consumer Goods / Processed & Packaged Goods
The Meet Group (MEET) - Technology / Internet Information Providers Price Target: 6.50
|Apr-24-19 05:45PM||Meet Group (MEET) Gains As Market Dips: What You Should Know Zacks|
|Apr-24-19 10:33AM||Meet Group (MEET) Earnings Expected to Grow: Should You Buy? Zacks|
|Apr-24-19 08:02AM||Should We Be Cautious About The Meet Group, Inc.'s (NASDAQ:MEET) ROE Of 0.6%? Simply Wall St.|
SunOpta (STKL) - Consumer Goods / Processed & Packaged Goods Price Target: 5.00
|Apr-25-19 07:30AM||SunOpta Inc. Schedules First Quarter 2019 Financial Results Release and Conference Call Business Wire|
|Apr-15-19 04:47PM||3 Red Flags That Suggest Investors Should Avoid SunOpta Motley Fool|
|Apr-02-19 07:45AM||SunOpta Inc. Reports Inducement Grants to CEO Joseph D. Ennen Under NASDAQ Listing Rule 5635(C)(4) Business Wire|
|Apr-02-19 07:30AM||SunOpta Expands Organic Oils Portfolio with Acquisition of Sanmark B.V.Business Wire|
SunOpta Inc. sources non-genetically modified (non-GMO) and organic ingredients; and manufactures food and beverage products in the United States, Canada, Europe, and internationally. The company operates through Global Ingredients and Consumer Products segments.
Top 2 Dow 30 Stocks to Watch for Week 18
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 also prior picks:
UnitedHealth Group Inc. (UNH)
Indicators are all strongly positive with breakout conditions accelerating and the ULT indicator is in the highest positive condition since the last January breakout. The current signals of strong positive investor sentiment increase the probability of a move to retest 255/share.
Selected previously, Visa remains a strong breakout continuation stock, week after week, with indicators and net inflows surging again. The average true range indicator shows significant upside continuation for the short term and potentially longer.
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 every Friday.
Next week the Fed QT schedule shows the largest asset rolloff of Treasuries and MBS since October of last year. Some caution is recommended as the Fed has not reduced or deviated significantly from this schedule and the correlations with increased volatility have been very high. Please review my many VIX articles for additional details on this important phenomenon.
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Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in MEET, V, UNH, STKL 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.