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 114 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 94 out of 115 weeks (81.74%). More than 150 stocks have gained over 10% in a 5 day trading week since this MDA testing began in 2017.
Momentum Breakout Stock Portfolio 2019 results YTD
The all time total return is now +85.78% without application of the Momentum Gauge signals to avoid market downturns. Returns through July so far are up +10.77% since the Momentum signals turned positive in June.
Avoiding trades during the months when the Momentum Gauge signal turned negative as shown by the two areas outlined on the chart would have resulted in 107.62% total gains. (See the Weekly Momentum Gauge chart below)
Examining the Average Weekly Returns
The cumulative total of top weekly breakout gains YTD is now up +234.36% and these breakouts in less than 5 days skew highly positive compared the cumulative S&P 500 returns of +20.70%. However in order to show the breakout frequency more clearly the YTD Average Weekly Returns graph below will now replace the Risk Range Graph available in prior breakout articles.
The graph above compares the average weekly S&P 500 gains YTD against the best case and worst case average returns of the top weekly breakout gains YTD. The S&P 500 gained +1.65% for the week. The average return of the 4 breakout picks last week was +2.78% with three stocks gaining between 6 to 10% in less than 4 trading days, but no 10% gains. The average high for last week's stocks was +5.84%. This remains a statistically significant result now spanning more than 100 weeks of testing.
As I always tell traders, don't fixate on firm 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 preserve gains for as long as these buy conditions remain intact.
Momentum conditions are increasing positively heading into Week 31. A sample of picks from prior weekly selections this year that are showing some positive momentum conditions are: TechTarget (TTGT) +67.56%, Qudian Inc. (QD) +50.69%, YETI Holdings (YETI) +50.19%, Pretium Resources (PVG) 28.23%, eHealth Inc. (EHTH) +80.43%, Take-Two Interactive Software (TTWO) +25.94%, Cryoport (CYRX) +49.04%, KEMET Corp. (KEM) +12.68%, Zscaler (ZS) +23.68%, Syndax Pharmaceuticals (SNDX) +19.36%, SSR Mining (SSRM) +36.45%, NovaGold Resources (NG) +55.83%, Twitter Inc. (TWTR) +8.92%, Catalyst Pharmaceuticals (CPRX) +24.68%, HealthEquity (HQY) +14.65%, Harrow Health (HROW) +34.89%, ZIOPHARM Oncology (ZIOP) +5.63%.
Market Conditions into Week 31
Currently momentum gauge sentiment and money flow indicators are still positive with declining conditions and increasing negative momentum through last week.
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 Positive Friday Anomaly continues
Last week I highlighted some additional capital flows that are important to the selection of momentum stocks, especially these very short term breakout selections. (See article of Cracking the Hedge Fund Code)
This week I am again highlighting the very positive Friday anomaly that accounts for 52.2% of all the gains in the S&P 500 YTD. Put another way, without Fridays the S&P 500 would only be up +9.13% YTD. If you are not in stocks on Fridays you are missing a very strong money flow anomaly.
In another prior article, I focused on different flows in the market that are driving the S&P 500 and other indexes to record highs. My thoughts on what could happen and what to look for in the second half of the year are offered here:
The Week 31 - 2019 Breakout Stocks for next week are:
The Week 31 stocks consist of one services, two healthcare stocks, and one technology stock. Subscribers have already seen a +2.65% net gain since Friday's early release. The Sample for next week are:
- Glu Mobile (GLUU) - Technology / Multimedia & Graphics Software
- ZIOPHARM Oncology (ZIOP) - Healthcare / Biotechnology
Glu Mobile (GLUU) - Technology / Multimedia & Graphics Software Price Target: 8.50 (Source: FinViz)
|Jul-27-19 08:23AM||Glu Mobile Investors Will Be Watching This Key Metric Next Week Motley Fool|
|Jul-25-19 05:50PM||Glu Mobile (GLUU) Dips More Than Broader Markets: What You Should KnowZacks|
|Jul-18-19 04:05PM||Glu Announces Date of Second Quarter 2019 Financial Results Release, Conference Call, and Webcast Business Wire|
Glu Mobile Inc. develops, publishes, and markets a portfolio of free-to-play mobile games for the users of smartphones and tablet devices. The company publishes titles primarily in four genres, including home decor, sports and action, fashion and celebrity, and time management.
ZIOPHARM Oncology (ZIOP) - Healthcare / Biotechnology
|Jul-25-19 06:00AM||Ziopharm Attracts Top Talent from the National Cancer Institute MoneyShow|
|Jul-24-19 08:30AM||Ziopharm Oncology Names Sath Shukla as Chief Financial OfficerGlobeNewswire|
|Jul-03-19 08:30AM||Ziopharm Oncology Names NCIs Dr. Drew Deniger to Direct TCR-T Cell Therapy Program GlobeNewswire|
|Jun-27-19 04:10PM||Ziopharm Oncology Initiates Phase 2 Trial Evaluating Combination Therapy of Controlled IL-12 with Libtayo® (cemiplimab-rwlc) to Treat Patients with Recurrent Glioblastoma GlobeNewswire|
ZIOPHARM Oncology, Inc., a biotechnology company, focuses on acquiring, developing, and commercializing a portfolio of immuno-oncology therapies for treating heterogenous solid tumors and unknown antigens. The company develops two immuno-oncology platform technologies, including Sleeping Beauty (SB), which is based on the genetic engineering of immune cells using a non-viral transposon/transposase system to reprogram T-cells outside of the body for infusion; and Controlled IL-12, which delivers interleukin 12 or IL-12, a master regular of the immune system, in a controlled and safe manner to focus the patient's immune system to attack cancer cells.
Top 2 Dow 30 Stocks to Watch for Week 31
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.
Last week Intel Corporation (INTC) gained +2.63% and was the top performing Dow stock through the open on Friday gaining as much as +6.43% before selling off through the day. Microsoft Corporation (MSFT) gained +3.45% for the week and also finished among the top Dow 30 stocks.
One of the top two stocks for next week based on the same published breakout parameters are also previous selections:
The Walt Disney Company (DIS)
Disney continues in strong positive breakout conditions in an ascending wedge breakout pattern with high positive net inflows and strong technical indicators. Conditions are highly favorable for a breakout above 144/share resistance and a follow on move to 150/share.
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. They are different from the Weekly Bounce / Lag momentum picks provided by Prof. Grant in his weekly selections.
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.
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Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in GLUU ZIOP 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.