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 250 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 over 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 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:
The cumulative average breakout returns for 2022 is up to +65.5% not using the gauge signal. Officially, for trading safety, there has only been one full week of a positive momentum gauge signal in 2022 with the worst start to the stock market since the 1939.
In another quick study this year I found that despite record high negative momentum conditions, 59.7% of all the MDA selections this year are beating the S&P 500 YTD. This is nearly double the market average that by comparison has only 30.3% of all stocks on the 3 major exchanges beating the S&P 500 YTD. That comes down to 43 picks in 18 weeks are beating the S&P 500. 32 picks are beating the S&P 500 by over 10% and as high as 121.7% (RES), +83.4% (TDW), +33.9% (PUMP) and +45.1% (GNK) significantly beating the major indices YTD.
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
Returns from 21 Weeks of Positive Momentum Gauge signals in 2021
Last year there were only 21 positive trading weeks to achieve +70.5% returns. For 2022 the market has been even worse with only one official positive weekly signal in the past 24 weeks since the November topping signal.
Momentum Gauge® trading signal: Negative conditions ahead of Week 19
Weekly return measurements into the 2nd quarter of 2022.
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.
Longer term many of these selections join the V&M Multibagger list now up to 105 weekly picks with over 100%+ gains, 44 picks over 200%+, 18 picks over 500%+ and 7 picks with over 1000%+ gains since January 2019 such as:
- Intrepid Potash (IPI) +1,889.2%
- Houghton Mifflin Harcourt Company (HMHC) +1,413.8%
- Enphase Energy (ENPH) +1,099.5%
- Trillium Therapeutics (TRIL) +1008.7%
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
2022 Breakout Portfolio Returns
The Momentum Gauge® conditions continue with highly negative warning signals with only one full week of positive conditions in week 12 of 2022 with minimum returns of -1.0% following the signals and avoiding the 2nd worst quarter to start the year since the Global Financial Crisis.
The Breakout Picks are high volatility selections for high short-term gains, but with no selections below $2/share, under 100k average daily volume, or less than $100 million market cap. Prior returns are documented here:
- Value & Momentum MDA Breakouts +70.5% In 52 Weeks: Final 2021 Year End Report Card | Seeking Alpha Marketplace
2022 marks the worst start to the stock market since 2009 and the Momentum Gauge® MDA buy signals continue strongly negative ahead of next week. It is best to follow the signals and avoid momentum stocks until conditions turn positive.
Market Momentum Conditions
Why not avoid all the major market downturns?
The Market Momentum Gauges® based on 7,500+ stocks continue negative this week at Negative 123 and Positive 19. The negative value continues above 40 warning level of adverse market conditions through 2022.
The Weekly Momentum Gauges® continue negative for 5 consecutive weeks with only three weeks positive in the past 24 weeks since November avoiding record market declines. The 2-year weekly chart below includes the 2020 Covid Correction.
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 40 on the gauge.
- Follow the Momentum Gauge® warning lights across the Market, S&P 500, and all 11 Sectors signals in a simple new feature below.
The Week 19 – 2022 Breakout Stocks for next week are:
The picks for next week consist of 4 Energy sector stocks. These stocks are released to members in advance every Friday morning near the open. 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.
- Helmerich & Payne (HP) – Energy / Oil & Gas Drilling
- Newpark Resources (NR) – Energy / Oil & Gas Equipment & Services
Helmerich & Payne – Energy / Oil & Gas Drilling
Price Target: $60.00/share (See my FAQ #20 on price targets)
Helmerich & Payne, Inc., together with its subsidiaries, provides drilling services and solutions for exploration and production companies. The company operates through three segments: North America Solutions, Offshore Gulf of Mexico, and International Solutions. The North America Solutions segment drills primarily in Colorado, Louisiana, Montana, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Texas, Utah, West Virginia, and Wyoming.
Newpark Resources – Energy / Oil & Gas Equipment & Services
Price Target: $5.00/share (See my FAQ #20 on price targets)
Newpark Resources, Inc. supplies products, as well as rentals and services primarily to the oil and natural gas exploration and production industry. The company operates through two segments, Fluids Systems and Industrial Solutions. The Fluids Systems segment provides drilling, completion, and stimulation fluids products and related technical services to customers primarily in the North America, Europe, the Middle East, and Africa, as well as certain countries in Asia Pacific and Latin America.
Top Dow 30 Stocks to Watch for Week 19
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.
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|
|(MRK)||Merck & Co.||+0.49%|
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.
These selections are significantly outperforming major Hedge Funds and all the hedge fund averages since inception. Consider the actively managed ARK Innovation fund down -51.76% YTD.
These picks are released monthly for long term total return with strong returns that are leading the S&P 500 by +15.2% through 2022. The March/May selections are heavy in energy up +6.8% and the new April picks are heavy in undervalued financial stocks for long term gains. All the major market indices remain negative YTD and the 2-year returns of monthly portfolios are also shown below not including returns from large dividends over +2% for each stock:
The Dow picks for next week are:
Chevron Corp (CVX)
Chevron is back again in strong breakout conditions following excellent earnings results on April 29th. While inflows are still down other indicators are showing improving investor sentiment toward breakout conditions above key resistance at 170/share. The price reflects a strong correlation with Crude Oil back above $110/bbl this week as in March and April.
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.
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 are beating the market indices in the worst downturn since 1939 for the S&P 500. The new active ETF portfolio is up +14.06% YTD beating the S&P 500 by over 27.5% and value portfolios of Piotroski-Graham picks are up +7.7% through one of the worst starts in stock market history. The Top ETF returns following the Momentum Gauge® signal from the April 21 negative daily signal are over +33%
The final 2021 returns for the different portfolio models from January of last year are shown below.
All the very best to you, stay safe and healthy and have a great week of trading!
JD Henning, PhD, MBA, CFE, CAMS