Week 15 MDA Breakout Stocks – April 2022: Short-Term Picks

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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 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 +49.24% not using the gauge signal. Officially, there has only been one full week of a positive signal in 2022 with the 2nd worst start to the stock market since the global financial crisis. Despite negative momentum conditions all year, 17 picks (30.3%) in 14 weeks are up over 10% and as high as 157.0% (RES), +86.4% (TDW), +110.5% (IPI), and +47.9% (PUMP) significantly beating the major indices YTD.

MDA breakout returns without signal

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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 and for 2022 we have only had one official positive weekly signal so far.

2021 MDA breakout returns

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Momentum Gauge® trading signal: Negative conditions ahead of Week 15

Weekly return measurements have started the 2nd quarter of 2022.

2022 weekly MDA returns

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Red weekly color indicates negative Momentum Gauge signals. MDA breakout selections tend to outperform when the signal is positive and negative values are below 40 level. This was an especially strong factor in 2021 showing cumulative returns below with and without the signal.

Cumulative returns comparing negative signals

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Historical Performance Measurements

The 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 140 weekly picks with over 100%+ gains, 60 picks over 200%+, 22 picks over 500%+ and 8 picks with over 1000%+ gains since January 2019 such as:

  • Intrepid Potash (IPI) +3,035.2%
  • Enphase Energy (ENPH) +1,310.9%
  • 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 negative 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 2009.

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:

2022 marks the worst start to the stock market since 2009 and the Momentum Gauge® MDA signals continue negative without a buy signal. It is best to follow the signals and avoid momentum stocks until conditions turn positive.

Annual returns

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Market Momentum Conditions

The Market Momentum Gauges® based on 7,500+ stocks continue negative this week at Negative 90 and Positive 45. The negative value continues above 40 warning level of adverse market conditions.

The Week 15 – 2022 Breakout Stocks for next week are:

The picks consist of 2 Energy, and 2 Basic Material sector stock. 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. Ramaco Resources Inc. (METC) – Basic Materials/ Coking Coal
  2. ProPetro Holding Corp. (PUMP) – Energy / Oil & Gas Equipment Services

Increasingly the gains this year are tied to the inflationary trade in Basic Materials and Energy with very large losses in Technology and Consumer Cyclicals.

Sector Chart

FinViz.com

Ramaco Resources Inc. – Basic Materials/ Coking Coal

METC is a prior pick from last year now up +26.0%

METC Chart

FinViz.com

Price Target: $22.00/share (See my FAQ #20 on price targets)

(Source: FinViz)

Ramaco Resources, Inc. produces and sells metallurgical coal. The company’s development portfolio includes the Elk Creek project consisting of approximately 20,166 acres of controlled mineral and 25 seams located in southern West Virginia; the Berwind property comprising approximately 31,200 acres of controlled mineral and an area of Squire Jim seam coal deposits, which is situated on the border of West Virginia and Virginia; the Knox Creek property consisting of approximately 62,100 acres of controlled mineral that is located in Virginia; and the RAM Mine property comprising approximately 1,570 acres of controlled mineral, which is situated in southwestern Pennsylvania.

Source: Company resources

METC report

StockRover.com

ProPetro Holding Corp. – Energy / Oil & Gas Equipment Services

PUMP is a prior pick from January now up +47.9% and from last October up +87.3% and has blown past all prior price targets.

PUMP chart

FinViz.com

Price Target: $18.00/share (See my FAQ #20 on price targets)

(Source: FinViz)

ProPetro Holding Corp., an oilfield services company, provides pressure pumping and other related services. The company operates through Pressure Pumping and All Other segments. The company offers hydraulic fracturing, cementing, acidizing, and coiled tubing services.

Source: Company resources

PUMP report

StockRover.com

Top Dow 30 Stocks to Watch for Week 15

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
KO Coca-Cola Company +2.51%
(MCD) McDonald’s Corp +1.54%
(KO) Coca-Cola Company +4.21%
(JNJ) Johnson & Johnson +3.24%
(HD) Home Depot -6.81%
(CVX) Chevron Corporation +5.53%
(TRV) The Travelers Companies +6.41%
(CAT) Caterpillar +1.02%
CVX Chevron Corporation +7.87%
(WMT) Walmart Inc. +13.59%

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 -35.88% YTD and Tiger Global hedge fund and the Tiger Crossover hedge fund down over -34% YTD: Tech Rout Leads To Record 34% Loss At Tiger Global’s Hedge Fund

These picks are released monthly for long term total return with strong returns that are leading the S&P 500 by +11.4% through 2022. The March selections are heavy in energy up +12.7% and the new April picks are heavy in undervalued financial stocks. All the major market indices remain negative YTD and the 2-year returns of monthly portfolios are also shown below:

Dividend returns YTD

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2 year returns on Dividend portfolios

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The Dow pick for next week is:

Chevron Corporation

Chevron has been the most frequent Dow weekly pick since last year with +65.4% returns from selection in Week 40 of last year and up +32.9% from the first weekly selection of this year. Earnings beat again for Q1 and high net institutional buying support continued strong gains for next week and longer.

Finviz Chart CVX

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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.

Frequency breakout charts

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

Frequency breakouts 2021 2020

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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 S&P 500 that is down -5.83% for 2022. The new active ETF portfolio is up +6.75% YTD and value portfolios of Piotroski-Graham picks are up 10.6% through one of the worst quarters in stock market history.

2021 YTD returns

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

2021 Returns

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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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