MDA Breakout Stocks Week 39 - September 2022: Short-Term Picks To Give You An Edge

Sep. 26, 2022 9:59 AM ETWVE, TDW, CLFD, VRDN, TA, ENPH, CELH, IPI, FUSN, LRMR, JNJ, MCD, MSFT, CAT, AAPL, CVX, JPM, DOW, MRK, AMGN, MMM3 Comments

Summary

  • Two new Breakout Stocks for Week 39 with better than 10% short-term upside potential and a Dow 30 Pick. Average cumulative returns now down to +108.7% YTD.
  • This week no picks beat 10% gains in less than a week with SLCR peak at +7.1% and continuing the highest negative Momentum Gauges® warning levels since July.
  • The streak of weekly picks gaining over 10% in less than a week of trading days decreased to 224 out of 279 trading weeks (80.3%) not counting multiple gainers.
  • All the V&M Portfolios are beating the S&P 500 YTD: Bounce/Lag +38.8%, Active ETF +21.4%, Piotroski-Graham +2.1%. Plus new July midyear picks are also higher led by Neg Forensic +16.6%.
  • The MDA breakout picks continue to beat the S&P 500 into 6 consecutive years delivering a CAGR +31.8% and 718.1% compounding returns through 2022. In 2021 returns were +70.5%.
  • Looking for a portfolio of ideas like this one? Members of Value & Momentum Breakouts get exclusive access to our model portfolio. Learn More »

Man enjoying sunrise at Mesa arch, Canyonlands

Matteo Colombo/DigitalVision via Getty Images

Introduction

The Weekly Breakout Forecast continues my doctoral research analysis on MDA breakout selections over more than 7 years. This subset of the different portfolios I regularly analyze has now exceeded 270 weeks of public selections as part of this ongoing live forward-testing research. The frequency of 10%+ returns in a week is averaging over 4x the broad market averages in the past 5+ years.

In 2017, the sample size began with 12 stocks, then 8 stocks in 2018, and at members' request since 2020, I now generate only 4 selections each week. In addition 2 Dow 30 picks are provided, as well as a new active exchange-traded fund ("ETF") portfolio that competes against a signal ETF model. Monthly Growth & Dividend MDA breakout stocks continue to beat the market each year as well. I offer 11 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.

Market Outlook

The Momentum Gauges®, economic events, and weekly market outlook are now separated into a weekly articles here which also includes my new weekly Technical Market update videos. Currently we are headed into the largest scheduled Fed quantitative tightening event for September in U.S. history.

Momentum Gauges® Stoplight signals for Week 39 continue with all the gauges extremely negative ahead of Week 39. Sector Gauges show several sectors at Max Low levels and historically this low level is rarely sustained for more than a few days without a bounce off the lows. See more discussion in the chat rooms and on the charts.

Momentum Gauge Stoplight

VMBreakouts.com

As a reminder much greater detail is covered live every day with current charts and signals. If you are not reviewing the latest charts and updates you could be missing out. With the signals predictably bearish for September and very negative in the worst month on average since 1927 the ETF models have been very active in bear funds with the current returns by model. The Active ETF portfolio frequently moves to cash (CLTL) over the weekend to minimize risk in these 3x leveraged funds:

ETF trading models using the Momentum Gauges

VMBreakouts.com

Current MDA Breakout Returns

So far YTD 2022 there are 84 picks in 38 weeks beating the S&P 500. 51 are picks beating the S&P 500 by over 10%+ in double digits. Leading MDA gainers include (WVE) +29.0%, (TDW) +82.2%, (CLFD) +46.5%, (VRDN) +60.6% (TA) +43.3%. Despite such high negative momentum conditions this year, 38 picks in 38 weeks have gained over 10% in less than a week. Additionally, 84 picks in 38 weeks have gained over 5% in less than a week in these high frequency breakout selections. These are highly significant statistical results that are further improved by following the Momentum Gauge signals.

YTD MDA average returns

VMBreakouts.com

Additional background, measurements, and high frequency breakout records on the Weekly MDA Breakout model is here: Value And Momentum MDA Breakouts +70.5% In 52 Weeks: Final 2021 Year End Report Card

2022 First-half weekly return results

First half returns with all the weekly returns available on the V&M Dashboard

1s half weekly returns of the MDA breakouts

VMBreakouts.com

Red weekly color indicates negative Market Momentum Gauge signals. MDA breakout selections outperform when the market signal is positive and daily negative values are below 40 level.

Historical Performance Measurements

Historical MDA Breakout minimal buy/hold returns are at +70.5% YTD when trading only in the positive weeks consistent with the positive 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.

Annual Returns MDA Breakouts

VMBreakouts.com

Longer term, many of these selections join the V&M Multibagger list now at 113 weekly picks with over 100%+ gains, 54 picks over 200%+, 18 picks over 500%+ and 11 picks with over 1000%+ gains since January 2019 such as:

  • Enphase Energy (ENPH) +1,920.90%
  • Celsius Holdings (CELH) +1,783.4%
  • Intrepid Potash (IPI) +1,023.5%
  • Trillium Therapeutics +1008.7%

More than 300 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

The Week 39 - 2022 Breakout Stocks for next week are:

The picks for next week consist of 3 Healthcare, and 1 Industrial sector stocks. These stocks are released to members in advance every Friday morning near the open for the best gains. Prior selections may be doing well, but for research purposes I deliberately do not duplicate selections from the prior week. These selections are based on MDA characteristics from my research, including strong money flows, positive sentiment, and strong fundamentals -- but readers are cautioned to follow the Momentum Gauges® for the best results. These picks are measured from release to members every Friday.

  1. Fusion Pharmaceuticals (FUSN) - Healthcare / Biotechnology
  2. Larimar Therapeutics (LRMR) - Healthcare / Biotechnology

Fusion Pharmaceuticals

FUSN chart

FinViz.com

Price Target: $6.00/share (See my FAQ #20 on price targets)

Sep-13-22 04:45PM Fusion Pharmaceuticals Announces Inducement Grants Under Nasdaq Listing Rule 5635(C)(4) CNW Group
Sep-08-22 10:42AM Pacira (PCRX) Up on Data From Exparel Label Expansion Study Zacks
Sep-07-22 08:30AM Fusion Pharmaceuticals to Present at the Morgan Stanley 20th Annual Global Healthcare Conference PR Newswire
Sep-07-22 08:30AM Fusion Pharmaceuticals to Present at the Morgan Stanley 20th Annual Global Healthcare Conference CNW Group
Aug-29-22 08:45AM Fusion Pharmaceuticals Announces First Patient Dosed in Phase 1/2 Study of FPI-1966 In Patients with Advanced Solid Tumors Expressing FGFR3 PR Newswire
Aug-29-22 08:45AM Fusion Pharmaceuticals Announces First Patient Dosed in Phase 1/2 Study of FPI-1966 In Patients with Advanced Solid Tumors Expressing FGFR3 CNW Group
Aug-13-22 08:09AM Insider Buying: The Fusion Pharmaceuticals Inc. (NASDAQ:FUSN) Independent Director Just Bought 370% More Shares Simply Wall St.

(Source: Company Resources)

Fusion Pharmaceuticals Inc., a clinical-stage oncology company, focuses on developing radiopharmaceuticals as precision medicines. The company has developed Targeted Alpha Therapies platform together with its proprietary Fast-Clear linker technology to enable us to connect alpha particle emitting isotopes to various targeting molecules in order to selectively deliver the alpha particle payloads to tumors.

FUSN data report

StockRover.com

Larimar Therapeutics (LRMR) - Healthcare / Biotechnology

LRMR chart

FinViz.com

Price Target: $9.00/share (See my FAQ #20 on price targets)

Sep-16-22 01:00PM Larimar Therapeutics Announces Closing of Underwritten Offering and Full Exercise of Option to Purchase Additional Shares GlobeNewswire
Sep-14-22 07:04AM Larimar Therapeutics Announces $70 Million Underwritten Offering GlobeNewswire
Sep-14-22 07:01AM Larimar Therapeutics Announces FDA Clearance to Initiate the 25 mg Cohort of a Phase 2 Dose Exploration Trial of CTI-1601 in Friedreichs Ataxia Patients GlobeNewswire
Aug-11-22 04:05PM Larimar Therapeutics Provides Updates on CTI-1601 Clinical Program Following a Type C Meeting with the U.S. Food and Drug Administration and Reports Second Quarter 2022 Operating and Financial Results GlobeNewswire
Jul-28-22 04:05PM Larimar Therapeutics Announces Presentation at the Upcoming Gordon Research Conference on Neurobiology of Brain Disorders GlobeNewswire
Jun-28-22 08:00AM Larimar Therapeutics Announces Oral Presentation at the Upcoming Gordon Research Conference on Mitochondria and Chloroplasts GlobeNewswire

(Source: Company Resources)

Larimar Therapeutics, Inc., a clinical-stage biotechnology company, focuses on developing treatments for rare diseases using its novel cell penetrating peptide technology platform. Its lead product candidate is CTI-1601, which is in Phase 1 clinical trial for the treatment of Friedreich's ataxia, a rare, progressive, and fatal genetic disease.

LRMR data report

StockRover.com

Top Dow 30 Stocks to Watch for Week 39

First, be sure to follow the Momentum Gauges® when applying the same MDA breakout model parameters to only 30 stocks on the Dow Index. Conditions have delivered the worst first half to the stock market since 1970. Second, these selections are made without regard to market cap or the below-average volatility typical of mega-cap stocks that may produce good results relative to other Dow 30 stocks.

The Dow index is in technical breakdown condition with 11 out of 30 stocks hitting new 52 week lows. The most recent picks of weekly Dow selections in pairs for the last 5 weeks:

Symbol Company Current % return from selection Week
(JNJ) Johnson & Johnson +0.65%
(MCD) McDonald's Corp. -2.56%
(MSFT) Microsoft Corp. -10.04%
(CAT) Caterpillar Inc. -13.33%
(AAPL) Apple, Inc. -5.52%
(CVX) Chevron Corp. -7.81%
(JPM) JPMorgan Chase & Co. -4.82%
(DOW) Dow Inc. -19.39%
MRK Merck & Co. -5.52%
(AMGN) Amgen, Inc. -9.39%

If you are looking for a much broader selection of large cap breakout stocks, I recommend these long term portfolios. The new mid-year selections were released to members to start July:

Piotroski-Graham enhanced value -

  • July midyear down -3.74%
  • January portfolio beating S&P 500 by +24.63% YTD.

Positive Forensic -

  • July midyear down -12.02%
  • January Positive Forensic beating S&P 500 by +3.24% YTD.

Negative Forensic -

  • July up +16.60%
  • January Negative Forensic beating S&P 500 by +20.46% YTD

Growth & Dividend Mega cap breakouts -

  • July midyear down -5.60%
  • January portfolio beating S&P 500 by +9.49% YTD

These long term selections are significantly outperforming many major Hedge Funds and all the hedge fund averages since inception. Consider the actively managed ARK Innovation fund down -60.01% YTD, Tiger Global Management -52% YTD.

The Dow pick for next week is:

3M Company (MMM)

3M is among the few Dow stocks not in complete technical breakdown with net MFI inflows increasing as investors run for the safety of one of the highest dividend stocks in the Dow at +5.27% yield. UBS upgraded the stock to Neutral in September with a price target of $126/share.

Finviz Chart MMM

FinViz.com

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.

MDA frequency breakout charts from 2017

VMBreakouts.com

The 2021 and 2020 breakout percentages with 4 stocks selected each week.

MDA frequency breakout charts 2020/2021

VMBreakouts.com

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.

Conclusion

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 also include one-year buy/hold value stocks. Remember to follow the Momentum Gauges® in your investing decisions for the best results.

All the V&M portfolio models are beating the market indices through the worst 6 month start since 1970. New mid-year value portfolios are also outperforming to start the next long term buy/hold period.

V&M Breakouts YTD returns

VMBreakouts.com

The final 2021 returns for the different portfolio models from January of last year are shown below.

V&M Breakouts 2021 portfolio returns

VMBreakouts.com

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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Welcome! I am 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. I'm the founder of Value & Momentum Breakouts.

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I'm JD Henning, the founder of Value & Momentum Breakouts. I've spent decades studying how to get better returns in the market. I've earned degrees researching markets, and even more importantly, I've spent the time myself as a trader and investor.  I am one of those unusual multi-millionaire, PhD's in finance, former Coast Guard officer with a bunch of certifications ranging from anti-money laundering specialist, investment adviser, to fraud examiner...  who genuinely enjoys helping others do well in the markets.  I'm bringing the fruits of my experience and research to this service.  I am highly accessible to members to answer questions and give guidance.  

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It's been quite the start of the year for investors. My guess is, after a decade of good times in the market, you’re here looking for some guidance in how to navigate these volatile markets and the uncertainty of the coronavirus and inflationary conditions. You’re in the right place. For the past 5 years I’ve made my trading systems public and helped hundreds of my subscribers navigate and profit from every market downturn and breakout - including the coronavirus crash last year.



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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such 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.

Additional disclosure: I continue to follow the Market Momentum Gauge® and Sector 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. I have been mostly in cash this year with many weeks of negative Momentum Gauge signals.

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