The Weekly Breakout Forecast continues my doctoral research analysis on MDA breakout selections over more than six years. This subset of the different portfolios I regularly analyze has now reached 198 weeks of public selections as part of this ongoing live forward-testing research.
In 2017, the sample size began with 12 stocks, then 8 stocks in 2018, and at members' request into 2020, I now generate 4 selections each week, 2 Dow 30 picks, and a separate article for monthly Growth & Dividend MDA breakout stocks. I now offer 10 top models of short and long-term value and momentum portfolios that have beaten the S&P 500 since my trading studies were made public.
Remarkably, the frequency streak of 10% gainers within a four- or five-day trading week remains at highly statistically significant levels above 80% not counting frequent multiple 10%+ gainers in a single week. Longer term many of these selections join the V&M Multibagger list comprising 206 weekly picks with over 100%+ gains, 86 picks over 200%+, 20 picks over 500%+ and 3 picks with over 1,000%+ gains in just over two years from January 2019.
More than 200 stocks have gained over 10% in a five-day trading week since this MDA testing began in 2017. A frequency comparison chart is at the end of this article. Readers are cautioned that these are highly volatile stocks that may not be appropriate for achieving your long term investment goals: How to Achieve Optimal Asset Allocation.
2021 YTD Breakout Portfolio Returns
The Breakout Picks are high volatility selections for short-term gains, but with no selections below $2/share, under 100k average daily volume, or less than $100 million market cap. The 2020 MDA Breakout ended the year +73.4% with returns through Week 52. Prior year return performance and helpful strategy information are available here:
For 2021 the maximal average weekly returns are +22.1% for 199.2% YTD maximal returns and the buy/hold model minimal average +1.7% weekly return for minimal returns +15.4% YTD. The S&P 500 average weekly return is +0.25% YTD.
These returns include trading against all the Negative Momentum Gauge® signal warnings which increases your risk of declines, but are conducted without interruption for testing and measurement purposes. Last year we had 20 weeks with the Momentum Gauges® negative. Not trading in those 20 weeks increased the annual 2020 MDA breakout returns to +94.7%
The Weekly Momentum Gauge® remains positive continuing the last positive signal from Week 45 of last year. However, negative gauge values are well above the 50 equilibrium caution level at 72.4. A new early test signal (red arrow) shows a high potential negative crossover after 3 consecutive weeks of positive gauge declines and negative gauge increases. The Fed's stimulus activity is shown in dark blue from the SOMA holdings reports. The Fed easing declined by -$25 billion last week reducing market liquidity and the Fed balance sheet.(Source: VMBreakouts.com)
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 Daily Momentum Gauge® signal turned negative on Friday, February 26th following the early test signal turning negative on February 11th. The Daily Momentum Gauges have correctly called every major market direction change since they began and are reserved for members of my subscription service. These movements and signals were updated in more detail through the Daily Update articles this past week:
- V&M Breakout Morning Update - March 5th: Markets Mixed, Fed Reduced -$25 Billion. Momentum Gauges® Signal Turned Negative And Oil Continues Above $65/Bbl.
- V&M Breakout Morning Update - March 3rd: Markets Higher DJIA +214 And Russell 2000 +1.1% With Crude Oil Above $60/Bbl And VIX Declining Below 24.
- V&M Breakout Morning Update - March 2nd: Momentum Gauge® Positive Signal After The Weekend. Market Futures Lower, USD Higher And Crude Oil Above $60/Bbl.
- V&M Breakout Morning Update - March 1st: Markets Higher Led By Russell 2000 And S&P 500 +1% With Crude Above 62/Bbl But Dollar & Bonds Jumping.
The Week 10 - 2021 Breakout Stocks for next week are:
The selections this week consist of two energy, one financial and one healthcare sector stocks. These stocks are released to members in advance every Friday morning near the open and were selected on the strong early conditions of Energy and Financial sectors. As cautioned last week and the strategy article linked above, use tighter stop limits or avoid momentum stocks during confirmed Negative Momentum Gauge® signals. Selections continue for live testing to optimize returns in both positive/negative conditions.
- Jounce Therapeutics (JNCE) - Healthcare / Biotechnology
- NOW inc. (DNOW) - Energy / Oil & Gas Equipment & Services
Jounce Therapeutics (JNCE) - Healthcare / Biotechnology
Price Target: $18.00/share (See my FAQ #20 on price targets)
|Mar-01-21 11:28PM||Need To Know: Analysts Are Much More Bullish On Jounce Therapeutics, Inc. (NASDAQ:JNCE) Simply Wall St.|
|Feb-26-21 05:00PM||Jounce Therapeutics, Inc. (JNCE) Q4 2020 Earnings Call Transcript Motley Fool|
|Feb-25-21 06:30AM||Jounce Therapeutics Reports Fourth Quarter and Full Year 2020 Financial Results GlobeNewswire|
|Feb-25-21 05:45AM||Jounce Therapeutics, Inc. to Host Earnings Call ACCESSWIRE|
Jounce Therapeutics, Inc., a clinical-stage immunotherapy company, develops therapies for the treatment of cancer. The company offers vopratelimab, a clinical-stage monoclonal antibody that binds to and activates the Inducible T cell CO-Stimulator, a protein on the surface of T cells found in various solid tumors, which is in Phase II clinical trial for the treatment of PD-1/PD-L1 inhibitor patients with non-small cell lung cancer and urothelial cancer.
NOW inc. (DNOW) - Energy / Oil & Gas Equipment & Services
Price Target: $14.00/share (See my FAQ #20 on price targets)
|Mar-01-21 08:30AM||NOW Inc. Announces Flex Flow Acquisition Business Wire|
|Feb-27-21 04:19PM||Big Shorts Michael Burry Is Betting On These 11 Stocks Insider Monkey|
|Feb-24-21 04:15PM||NOW Inc. Announces First Quarter 2021 Earnings Conference Call Business Wire|
|Feb-22-21 12:21PM||Michael Burry Goes on a Buying Spree in 4th Quarter GuruFocus.com|
NOW Inc. distributes downstream energy and industrial products for petroleum refining, chemical processing, LNG terminals, power generation utilities, and industrial manufacturing operations in the United States, Canada, and internationally. The company offers its products under the DistributionNOW and DNOW brand names. It provides consumable maintenance, repair, and operating supplies; pipes, valves, fittings, flanges, gaskets, fasteners, electrical products, instrumentations, artificial lift, pumping solutions, valve actuation and modular process, and measurement and control equipment; and mill supplies, tools, safety supplies, and personal protective equipment, as well as applied products and applications, such as artificial lift systems, coatings, and miscellaneous expendable items.
Top Dow 30 Stocks to Watch for Week 10
Applying the same MDA breakout model parameters to only 30 stocks on the Dow Index 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 may provide some strong additional basis for investors to judge future momentum performance for mega-cap stocks in the short- to medium-term. The most recent picks of weekly Dow selections in pairs for the last 5 weeks:
|Symbol||Company||Current % return from selection Week|
|(AXP)||American Express Co.||+8.26%|
|AXP||American Express Co.||+11.86%|
|JPM||JP Morgan Chase & Co.||+1.95%|
|(DIS)||Walt Disney Co.||-0.15%|
|(JPM)||JP Morgan Chase & Co.||+7.53%|
|(JNJ)||Johnson & Johnson||-5.38%|
If you are looking for a much broader selection of mega-cap breakout stocks beyond just 30 Dow stocks with more detailed analysis and strong returns I would recommend the Growth & Dividend MDA Breakout picks released monthly for long term total return not including dividends over 2%-plus annually:
- The December MDA Breakout Growth & Dividend picks currently up +21.1% (not including high dividends).
- The January MDA Breakout Growth & Dividend picks currently up 13.7% (not including high dividends).
- The February MDA Breakout Growth & Dividend picks currently down -3.4% (not including high dividends).
- The March MDA Breakout Growth & Dividend picks currently up +6.2% in the first week (not including high dividends).
The Dow picks for next week are:
UnitedHealth Group (UNH)
UnitedHealth cleared the key resistance from prior week selection and is strong again for Week 10. Indicators are all turning positive with strong breakout conditions toward a likely retest of key resistance around $365/share and room to run on all the indicators.
Background on Momentum Breakout Stocks
As I have documented before from my research over the years, these MDA breakout picks were designed as high frequency gainers.
These documented high frequency gains in less than a week continue into 2020 at rates more than four times higher than the average stock market returns against comparable stocks with a minimum $2/share and $100 million market cap. The enhanced gains from further MDA research in 2020 are both larger and more frequent than in previous years in every category. ~ The 2020 MDA Breakout Report Card
The frequency percentages remain very similar to returns documented here on Seeking Alpha since 2017 and at rates that greatly exceed the gains of market returns by 2x and as much as 5x in the case of 5% gains.
(Value & Momentum Breakouts)
The 2020 percentages of 208 MDA breakout stocks through 52 weeks of 2020 with four stocks selected each week.
MDA selections are restricted to stocks above $2/share, $100M market cap, and greater than 100k avg daily volume. Penny stocks well below these minimum levels have been shown to benefit greatly from the model but introduce much more risk and may be distorted by inflows from readers selecting the same micro-cap stocks.
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.
The actively traded V&M Premium Portfolio ended 2020 up +47.48% through 52 weeks beating the S&P 500 consistently every year since inception. The Premium Portfolio gains were achieved despite 20 weeks moving to cash following the Momentum Gauge® signals and total returns do not include the additional large gains from ETF bear funds suggested during the negative signal weeks.
All the very best to you, stay safe and healthy and have a great week of trading!
JD Henning, PhD, MBA, CFE, CAMS
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