Week 23 MDA Breakout Stocks – June 2022: Short-Term Picks

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 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:

• Value & Momentum Breakouts For 2022: 11 Models To Beat S&P 500

The cumulative average weekly breakout returns for 2022 is up to +79.30% not using the gauge signal. These are separate weekly picks that are added together and could also be compounded weekly in another measurement. Officially, for trading signals, we have had only 2 weeks of positive signals in 2022 with the worst 5 month start to the stock market since 1973. We are in unusual markets ahead of QT in June: “A good review of bear market bounces $SPY #SPX 2022 / 2008 overlay as #QT begins. Watch for strong confirmation of negative channel breakouts. Not all bounces are a bottom.”

In a quick study of the MDA breakout selections YTD, there are 60 picks in 22 weeks (68.2%) beating the S&P 500. 47 picks (53.4%) are beating the S&P 500 by over 10% and as high as +104.0% (RES), +129.7% (TDW), +46.6% (MNRL), +44.1% (TMST), +44.4% (EGY) and +74.2% (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 on the Momentum Gauges® so far despite strong returns in many negative market weeks.

Momentum Gauge® trading signal: Positive conditions ahead of Week 23

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 at 110 weekly picks with over 100%+ gains, 48 picks over 200%+, 18 picks over 500%+ and 10 picks with over 1000%+ gains since January 2019 such as:

• Intrepid Potash (IPI) +1,776.5%
• Houghton Mifflin Harcourt Company (HMHC) +1,413.8%
• Celsius Holdings (CELH) +1,357.2%
• Enphase Energy (ENPH) +1,319.7%
• Northern Oil and Gas (NOG) +1,164.4%
• 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 back in week 12 of 2022 with minimum returns of +1.19% following the signals and avoiding the worst 5 month market start since 1973.

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 100 day start to the stock market since 1939 and the worst 5 months start since 1973. Momentum Gauge® MDA buy signals have turned positive ahead of next week.

Market Momentum Conditions

Why not avoid all the major market downturns? It is best to follow the signals as the Federal Reserve’s Quantitative Tightening program is scheduled to begin in June: How Markets May React To Fed’s QT Program.

The Market Momentum Gauges® based on 7,500+ stocks turned positive this week at Negative 41 and Positive 60. So far in 2022 the positive conditions have lasted only 2.77 days on average. Negative conditions have lasted 11.14 days on average.

The S&P 500 gauges turned positive this week at Negative 11 and Positive 29. The S&P 500 has been the most resilient of the major indices but continues down -13.80% YTD.

The Weekly Momentum Gauges® turned positive after 8 consecutive weeks and with only three weeks positive in the past 27 weeks since November avoiding record market declines. The 2-year weekly chart below includes the 2020 Covid Correction. All prior positive weekly signals for 2022 have not lasted more than 2 weeks.

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.

Daily market and S&P 500 gauges positive with sectors improving and weekly momentum still negative.

The Week 23 – 2022 Breakout Stocks for next week are:

The picks for next week consist of 3 Energy and 1 Technology 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.

1. ConocoPhillips (COP) – Energy / Oil & Gas E&P
2. Liberty Energy (LBRT) – Energy / Oil & Gas Equipment & Services

ConocoPhillips – Energy / Oil & Gas E&P

Price Target: $130.00/share (See my FAQ #20 on price targets)

(Source: FinViz)

ConocoPhillips explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. It primarily engages in the conventional and tight oil reservoirs, shale gas, heavy oil, LNG, oil sands, and other production operations.

Source: Company resources

Liberty Energy – Energy / Oil & Gas Equipment & Services

Price Target: $25.00/share (See my FAQ #20 on price targets)

(Source: FinViz)

Liberty Energy Inc. provides hydraulic fracturing and wireline services, and related goods to onshore oil and natural gas exploration and production companies in North America. It also offers hydraulic fracturing pressure pumping services, including pressure pumping and pumpdown perforating services, as well wireline services, proppant delivery solutions, data analytics, related goods and technologies.

Source: Company resources

Top Dow 30 Stocks to Watch for Week 23

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:

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 -55.16% YTD and more hedge funds liquidating in 2022.

These picks are released monthly for long term total return with strong returns that are leading the S&P 500 by +14.88% through 2022. As members know all the portfolios are substantially improved by following the Momentum Gauges® signal. The March/May selections are heavy in energy and leading the S&P 500 by more than 21% while the April picks are heavy in undervalued financial stocks that should do very well in the next cycle. All the major market indices remain highly negative YTD while the 1 and 2-year returns of monthly portfolios are shown below – not including returns from large dividends over +2% for each stock:

The Dow pick for next week is:

Chevron

Chevron has been selected repeatedly as a Dow breakout stock that is up +55.2% from selection in December and +38.9% from selection again in January. Chevron continues with strong positive momentum and net MFI inflows. Earnings beat significantly April 29th and indicators and valuations show much more room to run with large institutional net buying and high dividend +3.2%.

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.

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 in the worst 100 day start to the US stock market since 1939 and the worst 5 month start since 1973. The new active ETF portfolio is up +13.08% YTD beating the S&P 500 by over +26.8% YTD. The value portfolios of Piotroski-Graham picks are up +9.26%. The Top ETF returns in the last Momentum Gauge® signal from April 21st negative daily signal were as high +33% and the positive signal has just changed to bull funds with LABU +10.8% the most positive.

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