NEWS

Week 1 MDA Breakout Stocks - January 2022: Short-Term Picks To Give You An Edge

Jan 2, 2022
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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 reached over 240 weeks of public selections as part of this ongoing live forward-testing research.

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, 2 Dow 30 picks, and separate articles for ETF/ETNs and monthly Growth Dividend MDA breakout stocks. I offer 10 top models of short and long term value and momentum portfolios that have beaten the SP 500 since my trading studies were made public: Value And Momentum Breakouts For 2021: 10 Models To Beat The SP 500, Again

Charts and tables will restart for 2022 at the end of Week 1.

Returns from 21 Weeks of Positive Momentum Gauge signals in 2021

Breakout stock returns 2021

Momentum Gauge® trading signal: Negative conditions ahead of Week 1

Week 1 MDA Breakout Stocks - January 2022

Week 1 MDA Breakout Stocks - January 2022 (Source: VMBreakouts.com) Red weekly color shows how poorly market momentum and investor enthusiasm sustains through the week when the Momentum Gauges® are negative. This is well documented in my published research.

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 VM Multibagger list now up to 184 weekly picks with over 100%+ gains, 82 picks over 200%+, 24 picks over 500%+ and 8 picks with over 1,000%+ gains since January 2019 such as:

  • Celsius Holdings (CELH) +1,486.6%
  • Enphase Energy (ENPH) +1,222.8%
  • Intrepid Potash (IPI) +1,153.1%
  • 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

2021 Breakout Portfolio Returns

The Breakout Picks are high volatility selections for short-term gains, but with no selections below $2/share, under 100k average daily volume, or less than $100 million market cap. The 2020 MDA Breakout ended the year +73.4% with returns through Week 52. Prior return performance is documented here:

  • Value Momentum MDA Breakouts: Final 2020 Year-End Report Card

For 2021 the maximal average weekly returns are +10.27% for total 534.0% YTD maximal returns. Using the blind buy/hold approach and not following the Momentum Gauges® is delivering minimal average -0.75% weekly return. The SP 500 average weekly return is +0.50% YTD.

Annual MDA breakout portfolio returns

Market Momentum Conditions

The Momentum Gauges® closed at Negative 74 and Positive 36 at high negative levels well above 40.

The November 16th negative signal helped us avoid max declines of -10.8% on the broad Russell 2000 index, -5.2% on the SP 500, and -7.6% on the Nasdaq 100. The Market Momentum Gauges® are negative heading into the start of 2022. Momentum Gauge Topping Signal: The Second Largest 2021 Negative Signal To Date

Market momentum gauges (Source: VMBreakouts.com)

While the rest of broad market is in mostly negative momentum conditions, the SP 500 Momentum Gauges® of 500 mega/large cap stocks remain positive for the past 8 trading days with stronger conditions among the SP 500 index stocks.

SP 500 momentum gauges

A new private beta testing of the live Momentum Gauges® is available and you can get on the list here: Value Momentum Breakouts - Top Financial Models for Double-Digit Success

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.

The Week 1 - 2022 Breakout Stocks for next week are:

The new picks for 2022 consist of 1 Technology, 1 Healthcare, 1 Industrials and 1 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 including strong money flows, positive sentiment, and fundamentals -- but readers are cautioned to follow the Momentum Gauges® for the best results.

  1. Dyadic International (DYAI) - Healthcare / Biotechnology
  2. urban-gro Inc. (UGRO) - Industrials / Farm Heavy Machinery

Dyadic International - Healthcare / Biotechnology

Dyadic International stock

(Source: VMBreakouts.com)

Price Target: $7.00/share (See my FAQ #20 on price targets)

(Source: FinViz)

Dyadic International, Inc., a biotechnology platform company, develops, produces, and sells enzymes and other proteins in the United States. The company utilizes its patented and proprietary C1 technology and other technologies to conduct research, development, and commercial activities for the development and manufacturing of human and animal vaccines and drugs, such as virus like particles and antigens, monoclonal antibodies, fab antibody fragments, Fc-fusion proteins, biosimilars and/or biobetters, and other therapeutic enzymes and proteins

(Source: StockRover)

Dyadic International ranking and profitability

urban-gro Inc. - Industrials / Farm Heavy Machinery

UGRO stock

(Source: VMBreakouts.com) Price Target: $14.00/share (See my FAQ #20 on price targets)

(Source: FinViz)

urban-gro, Inc. operates as an engineering design services company that integrates complex environmental equipment systems to create indoor cultivation facilities for the commercial horticulture market the United States, Canada, and Europe. The company offers engineering and design services, including cultivation space programming, integrated cultivation design, and full-facility mechanical, electrical, and plumbing engineering; training services ranging from equipment standard operating procedure libraries to staff training sessions; facility and equipment commissioning services; program overview and pricing; and related-party hardware and software platforms.

(Source: StockRover)

UGRO stock valuation

Top Dow 30 Stocks to Watch for Week 1

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 CSCO Cisco Systems, Inc. +1.88% (DOW) Dow Inc. +2.87% (MRK) Merck Co., Inc. +1.26% (VZ) Verizon Communications -2.28% CSCO Cisco Systems, Inc. +8.90% (IBM) Intl Business Machines +7.51% (CSCO) Cisco Systems, Inc. +12.70% (CVX) Chevron Corporation +2.57% (PG) Procter Gamble +10.92% (WMT) Walmart Inc. -0.14%

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 picks are released monthly for long term total return with November selections up +14.8% and December up +9.4%. The +16.1% average weighted monthly returns do not include the large dividends above 2%+ for every stock. The 2-year returns of the portfolios are shown below with all 24 portfolios positive except for two.

(Source: VMBreakouts.com)

  • The August MDA Breakout Growth Dividend portfolio
  • The September MDA Breakout Growth Dividend portfolio
  • The October MDA Breakout Growth Dividend portfolio
  • The November MDA Breakout Growth Dividend portfolio
  • The December MDA Breakout Growth Dividend portfolio
  • Samples from the new January portfolio will be released next week.

The Dow pick for next week is:

Intel Corporation (INTC)

Intel indicators are all positive with net MFI inflows increasing again and strong valuations 10x earnings and 5.5x free cash flow. The Q3 earnings beat is likely to support a rebound back above 54/share key resistance. INTC stock resistance

(Source: VMBreakouts.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.

Week 1 MDA Breakout Stocks - January 2022

(Value Momentum Breakouts)

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

Week 1 MDA Breakout Stocks - January 2022

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.

The final 2021 returns for the different portfolio models from January of last year are shown below. The charts of all the portfolios will restart to 0% this week:

Week 1 MDA Breakout Stocks - January 2022

(Source: 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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