The Weekly Breakout Forecast continues my doctoral research analysis on MDA breakout selections over more than 8 years. This high frequency breakout subset of the different portfolios I regularly analyze has now reached 299 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 6+ 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 using the MDA methodology, but I highly recommend the monthly Growth & Dividend mega cap breakout portfolios if you are looking for larger cap selections beyond only 30 Dow stocks.
As long term investors know, you can compound $10,000 into $1 million with 10% annual returns in less than 50 years. This model serves to increase the rate of 10% breakouts into 52 weekly intervals instead of years. In 2022, the worst market since 2008: 113 MDA picks gained over 5%, 52 picks over 10%, 22 picks over 15%, and 13 picks over 20% in less than week.
My strategy for 2023 is to stay bearish for the February cyclical pattern as discussed in my January forecast articles. Short term we are seeing an early top in bonds and China stocks after strong January gains. The early negative test signal has also begun for an early warning signal of market downturns. The official negative Momentum Gauge signal has not started, but conditions are still declining from the most elevated January levels we have seen since the market peak in August 2022. Longer term I remain bullish on China as the largest economy still in QE and stimulating their markets, while all other major economies are in QT fighting inflation. I plan to overweight US treasuries/bonds as explained in the 2023 technical forecast article while remaining cautious on US stocks following the gauge signals.
Mid-year 2023 is where things may get interesting with potential for a Fed pivot. Dip-buyers will continue to try to pull this anticipated pivot event forward in time extending high market volatility while the Fed hikes rates. Mid-year I also plan to leverage strong results from a new June Russell Reconstitution anomaly we found last year that is actively tracked on the dashboard: FTSE Russell Reconstitution Anomaly Study - Strong +22.7% Difference After 5 Months
The schedule of reports and forecast articles for 2023 are here for your benefit.
All the Daily Momentum Gauges continue positive this week including monthly gauges. However the gauges continue to decline from peak January levels at the highest positive recorded levels since August 2022 that corresponded with the last prior market peak. Sector gauges are also declining with Energy negative.
Daily Momentum Gauges continue positive but declining from the highest levels since last August. Strong similarities to the August market top continue to take shape as illustrated below. The negative early test signal has been active since Feb. 3rd with rising negative values and declines in the momentum gauge differences as the gauges move closer to an official negative signal. This usually precedes larger market downturns like we saw last year.
The two weekly breakout portfolios are shown below with current 2023 returns. The ongoing competition between the Bounce/Lag Momentum model (from Prof Grant Henning, PhD Statistics) and MDA Breakout picks (from JD Henning, PhD Finance) are shown below with / without using the Momentum Gauge trading signal. The per-week returns equalize the comparison where there were only 16 positive trading weeks last year using the MDA trading signal (negative values below 40).
For 2022, the worst market since 2008: 113 MDA picks gained over 5%, 52 picks over 10%, 22 picks over 15%, and 13 picks over 20% in less than week. These are statistically significant high frequency breakout results despite many shortened holiday weeks.
While not the purpose of my model, longer term (using the trading video in FAQ #20) many of these selections may join the V&M Multibagger list now at 119 weekly picks with over 100%+ gains, 52 picks over 200%+, 19 picks over 500%+ and 9 weekly picks with over 1000%+ gains since January 2019 such as:
More than 450 stocks have gained over 10% in less than a week since this MDA testing began in 2017. Frequency comparison charts are 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
Historical MDA Breakout minimal buy/hold (worst case) returns have a compound average growth rate of 30.87% and cumulative minimum returns of +708.19% from 2017. The minimal cumulative returns for 2022 were -0.21%, average cumulative returns were +67.05%, and the best case cumulative returns were +360.25%. The chart reflects the most conservative measurements adding each 52 weekly return in an annual portfolio simulation, though each weekly selection could be compounded weekly.
The picks for next week consist of 2 Basic Materials, 1 Healthcare and 1 Energy sector stocks. These stocks are measured from release 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.
Warrior Met Coal - Basic Materials / Coking Coal
Price Target: $45.00/share (Analyst Consensus + Technical See my FAQ #20)
|Feb-18-23 07:21AM||Warrior Met Coal Knows How To Allocate Capital Simply Wall St.|
|07:12AM||Warrior Met Coal Full Year 2022 Earnings: Misses Expectations Simply Wall St.|
|Feb-16-23 12:00PM||Warrior Met Coal (HCC) is a Great Momentum Stock: Should You Buy? Zacks|
|Feb-15-23 04:05PM||Warrior Met Coal Reports Fourth Quarter and Full Year 2022 Results Business Wire|
(Source: Company Resources)
Warrior Met Coal, Inc. produces and exports non-thermal metallurgical coal for the steel industry. It operates two underground mines located in Alabama. The company sells its metallurgical coal to a customer base of blast furnace steel producers located primarily in Europe, South America, and Asia. It also sells natural gas, which is extracted as a byproduct from coal production.
ShockWave Medical - Healthcare / Medical Devices
Price Target: $260.00/share (Analyst Consensus + Technical See my FAQ #20)
|Feb-18-23 07:07AM||ShockWave Medical Full Year 2022 Earnings: EPS Beats Expectations Simply Wall St.|
|05:23AM||2 Beaten-Down Growth Stocks to Buy Now Before They Start Soaring Again Motley Fool|
|Feb-17-23 04:04PM||Shockwave Medical Just Tripled Profit Expectations, Delivering 991% Growth Investor's Business Daily|
|07:09AM||Shockwave Medical's Q4 Earnings Top, Revenues Surge Y/Y Zacks|
|12:00AM||ShockWave Medical Q4 2022 Earnings Call Transcript Motley Fool|
|Feb-16-23 05:15PM||Shockwave Medical Q4 Earnings and Revenues Surpass Estimates Zacks|
(Source: Company Resources)
ShockWave Medical, Inc., a medical device company, engages in developing and commercializing intravascular lithotripsy technology for the treatment of calcified plaque in patients with peripheral vascular, coronary vascular, and heart valve diseases worldwide. The company offers M5 catheters for treating above-the-knee peripheral artery disease (PAD); C2 catheters for treating coronary artery disease; and S4 catheters for treating below-the-knee PAD. It serves interventional cardiologists, vascular surgeons, and interventional radiologists through sales representatives and sales managers, and distributors.
First, be sure to follow the Momentum Gauges when applying the same MDA breakout model parameters to only 30 stocks on the Dow Index. 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 most recent picks of weekly Dow selections in pairs for the last 5 weeks:
|Symbol||Company||Current % return from selection Week|
|(MRK)||Merck & Co.||+2.35%|
|(PG)||Procter & Gamble Company||-1.11%|
|IBM||International Business Machines||-0.53%|
|(DIS)||Walt Disney Co.||+5.69%|
|(IBM)||International Business Machines||-4.69%|
All new long-term portfolio selections for 2023 have started. See the stock release articles below for more details. So far many of the long-term portfolios are significantly beating major indices and already achieving double-digit returns.
If you are looking for a much broader selection of large cap breakout stocks, I recommend these long term portfolios. The new 2023 selections have been released in the links below to members to start the New Year:
New 2023 Piotroski-Graham enhanced value -
New Growth & Dividend Mega cap breakouts -
These long term portfolio selections have significantly outperformed many major hedge funds and all the hedge fund averages since inception.
The Coca-Cola Company is a strong defensive sector stock with high 2.93% dividend yield as markets enter weakening momentum conditions. Analysts continue with buy ratings and consensus price target of $68.5/share. Inflows are steady as investors move more to safety and away from energy and technology.
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.
The 2021 and 2020 breakout percentages 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 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 beat the market indices again last year with consistent outperformance of the major indices. All new portfolios are in a strong start to 2023 with many portfolios already in double-digit returns.
The final portfolio returns for 2022
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.
I'm JD Henning, the founder of Value & Momentum Breakouts. I've spent decades capturing many of the best ways to consistently beat the markets. 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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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.