- Two new breakout stocks for Week 15 of 2021 with better than 10% short-term upside potential.
- This past week 2 of 4 stocks beat 10% in less than 5 days with CAMT peaking at +10.3% and HIMX +15.7%. The 2 Dow picks gained over +6.7%.
- 2021 MDA minimal portfolio returns are +6.9% and maximal +243.2% YTD with 32 out of 56 picks (57.1%) gaining over 10% in less than a week.
- The streak of weekly picks gaining over 10% in less than a week of trading days continues to 170 out of 203 trading weeks (83.7%) not counting multiple gainers.
- The MDA breakout picks completed 2020 up +73.4% beating the S&P 500 for the 4th consecutive year with avg annual returns of +43.8%.
- This idea was discussed in more depth with members of my private investing community, Value & Momentum Breakouts. Learn More »
The Weekly Breakout Forecast continues my doctoral research analysis on MDA breakout selections over more than 6 years. This subset of the different portfolios I regularly analyze has now reached 200 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.
(Source: VMBreakouts.com) I have introduced a red weekly color to more clearly show how poorly momentum sustains in the market through the week when the Momentum Gauges are negative. This is well documented in my research.
Frequently Asked Questions
I would like to briefly highlight three important questions I am regularly asked by members that will certainly help many regular readers of my public articles. These and many more questions are covered in detail in the articles and annual performance reports of the more than 10 different portfolio types offered at V&M Breakouts. It is very important to understand the model for the best possible results and timing.
1. Why are the Momentum Gauges negative but the market is going up?
The Momentum Gauges assess the conditions of over 7,500+ stocks of all sizes across the major US stock exchanges, but not including over 10,000+ stocks on the OTC market. However, fewer than 630 stocks comprise the major stock "market" indices. Some stocks like Apple Inc. (AAPL) and Microsoft (MSFT) are simultaneously represented in the DJIA, the S&P 500, and Nasdaq 100 with weightings as high as 11.1% of a single "market" index. This view of the stock market using only 630 mega and large cap stocks out of over 17,000+ stocks gives a distorted perspective that many investors don't fully appreciate.
As a result I have also created the S&P 500 Momentum Gauges that have remained highly positive over the past month. These gauges only look at the mega/large cap index of the S&P 500 and very closely reflect the major market indices or roughly 3.7% of the stocks in the US market.
2. Why do you caution against buying MDA breakouts when the Momentum Gauges are highly elevated or negative?
Over four years of data show that when the Momentum Gauges are negative investors are much more risk averse, hold stocks for much shorter trading periods, exit stocks more aggressively, and increasingly avoid the riskier small cap stocks in the marketplace. I view the gauges as a type of measure of the broader investing "soil" and in negative conditions the "soil" does not sustain momentum growth as well as when the conditions are highly positive. For example, last year we had 20 weeks with the Momentum Gauges negative. Not trading in those 20 weeks of bad market "soil" increased the annual 2020 MDA breakout returns from 73.4% in 52 weeks to +94.7% in 32 weeks representing an increase over 21%.
No matter what the Momentum Gauge conditions show, I continue to release weekly MDA picks to further my research and see how I can enhance returns even in the worst market conditions. Readers should consider these factors closely as you contemplate your next weekly trades in any US traded stock. Unfortunately, we are heading into Week 15 with the Momentum Gauges negative again, but the S&P 500 gauges highly positive, so please use caution with the high volatility MDA breakout picks.
3. How should I trade when the Momentum Gauges continue at high negative levels week after week?
At high negative Momentum Gauge conditions the broad market has certain areas of significant weakness and danger to investors. I use additional gauges to locate strength and weakness in a diverging market. It is clear in the performance chart across market cap segments as well as the S&P 500 Momentum Gauges that money is moving to the fewer mega and large cap stocks over the past month. In fact, this past week the mega cap Dow picks outperformed the average MDA breakout returns with Salesforce.com +6.92% and Microsoft up +6.69%.
In these conditions, members of my service are encouraged to follow the money flow to the 2021 Piotroski value portfolio +40.7% and Forensic value portfolios +17.9% and +19.9% as well as the large/mega cap MDA Growth & Dividend portfolios:
However, when the Momentum Gauges, the S&P 500 Momentum Gauges, and the 11 Sector Momentum Gauges all turn negative this is the strongest signal to move to the safety of cash or inverse funds. Many more years of detailed research on this model as well as independent member studies are available in the Members' Library.
Historical Performance Measurements
The MDA Breakout minimal buy/hold returns are +44.35% YTD when not trading in weeks with negative Momentum Gauges signals. Remarkably, the frequency streak of 10% gainers within a 4- or 5-day trading week continues 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 now up to 207 weekly picks with over 100%+ gains, 90 picks over 200%+, 22 picks over 500%+ and 5 picks with over 1,000%+ gains since January 2019.
More than 200 stocks have gained over 10% in a 5-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 return performance and helpful strategy information are available here in the 2020 and Q1 2021 articles:
- V&M Breakout Quarterly Forecast For April-June 2021 With Hits And Misses Of The First Quarter.
- Value & Momentum MDA Breakouts: Final 2020 Year-End Report Card
For 2021 the maximal average weekly returns are +17.3% for total 243.2% YTD maximal returns. Using the buy/hold model not following the Momentum Gauges is delivering minimal average +0.49% weekly return for minimal returns +6.9% YTD. The S&P 500 average weekly return is +0.71% 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.
The Weekly Momentum Gauges continue negative from Week 12 through last Thursday close. This continues the first negative weekly close since Week 45 of last year. The scaled S&P 500 continues higher in an unusually strong divergence from the negative weekly scores as the broader market remains weak, but the large cap S&P 500 index surges higher. It will be interesting to see how this large performance divergence between small and large cap stocks gets resolved next week. The Fed's stimulus activity is shown in dark blue from the SOMA holdings reports with $16.3 billion in easing in the past week.(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 Week 15 - 2021 Breakout Stocks for next week are:
The selections this week consist of 2 consumer cyclical, 1 financial and 1 healthcare sector stocks. These stocks are released to members in advance every Friday morning near the open and were also selected on the strong momentum conditions of these sectors.
- Citi Trends (CTRN) - Consumer Cyclical / Apparel Retail
- Liquidity Services (LQDT) - Consumer Cyclical / Internet Retail
Citi Trends - Consumer Cyclical / Apparel Retail
Price Target: $110.00/share (See my FAQ #20 on price targets)
|Apr-06-21 03:46AM||Citi Trends Shareholders Have Enjoyed A Whopping 913% Share Price Gain Simply Wall St.|
|Apr-01-21 05:05AM||Citi Trends' Shares March Higher, Can It Continue? Zacks|
|Mar-24-21 12:00PM||Citi Trends is a Great Momentum Stock: Should You Buy? Zacks|
|Mar-22-21 11:26AM||Top Ranked Momentum Stocks to Buy for March 22nd Zacks|
"Citi Trends, Inc. operates as a value-priced retailer of fashion apparel, accessories, and home goods. The company offers apparel, such as fashion sportswear for men and women, as well as children, including newborns, infants, toddlers, boys, and girls; accessories comprising handbags, jewelry, footwear, belts, intimate apparel, scrubs, and sleepwear; and functional bedroom, bathroom, and kitchen products, as well as beauty products and toys."
Source: Company resources
Liquidity Services - Consumer Cyclical / Internet Retail
Price Target: $24.00/share (See my FAQ #20 on price targets)
|Apr-09-21 09:54AM||Athens County OH Engineer Jeff Maiden Selects GovDeals to Move Surplus Sales Online GlobeNewswire|
|Mar-31-21 06:26AM||Liquidity Services, Inc.'s Stock Has Seen Strong Momentum: Does That Call For Deeper Study Of Its Financial Prospects? Simply Wall St.|
|Mar-24-21 09:03AM||Greensville County Public Schools, VA now using GovDeals to sell their Surplus GlobeNewswire|
|Mar-08-21 06:45AM||Liquidity Services Announces Approval of New $10,000,000 Stock Repurchase Program GlobeNewswire|
Liquidity Services, Inc. provides e-commerce marketplace that enable buyers and sellers to transact in an automated environment. The company's marketplaces include liquidation.com that enable corporations to sell surplus and salvage consumer goods and retail capital assets; govdeals.com provides self-directed service solutions in which sellers list their own assets that enables local and state government entities, and commercial businesses located in the United States and Canada to sell surplus and salvage assets.
Source: Company resources
Top Dow 30 Stocks to Watch for Week 15
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|
|(WBA)||Walgreens Boots Alliance||+3.12%|
|WBA||Walgreens Boots Alliance||+1.82%|
|(JPM)||JPMorgan Chase & Co.||+0.08%|
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 +43.9% avg weighted monthly returns not including dividends all above 2%+ annually:
- The January MDA Breakout Growth & Dividend picks currently up +22.8% (not including high dividends).
- The February MDA Breakout Growth & Dividend picks currently up +2.5% (not including high dividends).
- The March MDA Breakout Growth & Dividend picks currently up +14.1% in March (not including high dividends).
- The April MDA Breakout Growth & Dividend picks were just released this past week and are down -0.16%.
The Dow pick for next week is:
3M Company (MMM)
3M Company is highly attractive to investors looking for strong stocks in the industrial sector as the new $2.2 trillion infrastructure bill is getting a lot of attention. Net MFI inflows have increased sharply and a breakout is beginning across the indicators after several weeks of consolidation. Next price resistance is around $210/share returning to early 2019 levels.
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 4 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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This article was written by
JD Henning is a Finance PhD, MBA, investment adviser, fraud examiner and certified anti-money laundering specialist with more than 30 years trading and investing stocks and other securities. JD runs Value & Momentum Breakouts where he identifies identify breakout signals and breakdown warnings using technical and fundamental analysis.Signals from his proprietary Momentum Gauges® not only alert subscribers of market changes, but the strength of markets for short term breakouts or breakdown warnings across 11 different sectors. Top stock and ETF selections use technical and fundamental systems in proven financial studies. Value & Momentum Breakouts is the place to build your own optimal portfolio mix with a community of like-minded investors and traders. Features include a Premium Portfolio, bull/bear ETF strategy, morning updates and an active chat room. Learn more.
Analyst’s Disclosure: I am/we are long FNGU, SOXL< LABU. 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.
I am long several funds following the Momentum Gauge® signals. I adjust my exposure ahead of weekends and holidays to minimize the risk from these high volatility 3x funds that may not be appropriate investments for your portfolio. Readers are highly encouraged to consider your own optimal asset allocation strategies to diversify risks and enhance returns.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.