SMCI - July MDA Breakout Stocks Week 29 - 2023: High-Frequency Gainers To Give You An Edge

2023-07-17 05:36:22 ET

Summary

• Two new Breakout Stocks for Week 29 with better than 10% short-term upside and a Dow 30 Pick. Average cumulative returns for 2023 are at +126.4% YTD.
• Last week 3 out of 4 picks gained over 13.4% with peak gains in KODK +23.8%, SMCI +19.2%, YMM +13.4%. The S&P 500 gained +2.4%.
• The streak of weekly picks gaining over 10% in less than a week has reached 254 out of 320 trading weeks (79.3%) not considering multiple gainers or negative MG signals.
• Annual returns are simulated by adding 52 weekly selections though they could be compounded weekly. Since inception over 450 stock picks have gained over 10% in less than a week.
• The MDA breakout picks continue to beat the S&P 500 into 7 consecutive years now delivering +934.4% compound returns through 2023 and a CAGR +37.1%.

Introduction

For readers who want to skip the details, market updates, the Momentum Gauge charts, more New Feature charts, and ignore additional long term value stock ideas along with the MDA strategies spanning more than a decade of research, here are the MDA Breakout picks for next week:

• Asana, Inc. ( ASAN )
• Axonics, Inc. ( AXNX )
• Butterfly Network, Inc. ( BFLY )
• Jiayin Group, Inc. ( JFIN )

Dow picks :

• JPMorgan Chase ( JPM )
• UnitedHealth ( UNH )

For the rest of you, I think you will like the new MDA breakout charts that will be a new feature this year. You will find links to trading strategies, years of measurement results, and additional investing opportunities to consider this year.

Warning: All of the published results are only possible for members. These stocks are measured from actual release on Friday morning to Friday close. Sample stocks are released publicly and only with significant delay.

Overview

The Weekly Breakout Forecast continues my doctoral research analysis on MDA breakout selections since 2013. This high frequency breakout subset of the different portfolios I regularly analyze has now exceeded 320 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 long term value portfolios described below if you are looking for a wider selection of large cap stocks 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.

Momentum Gauges Dashboard for Week 29

The Momentum Gauges all declined Friday in the first decline after a week of gains to the highest levels since June 2021. In prior peak levels the market declined in the following month, but the momentum gauge signal continues positive from June 1st. Historically, July is the 2nd best month of the year on average for the S&P 500 since 1927.

• Guide: Maximizing Market Returns With The Automated Momentum Gauges
• Strategies: How to Trade for Maximum Returns

Weekly Momentum Gauges for 2023 continue positive for 9 consecutive weeks from May 12th. Positive weekly MG values rose sharply this week, now exceeding all prior peaks on the 1-year chart below. The daily gauges continue positive from June 1st, but showed a sharp decline on Friday with all the sector gauges declining from peak levels.

Watch the Mega caps closely! If they breakdown again the market will breakdown sharply. The largest 5 mega cap stocks are significantly outperforming value indexes (in red) back to prior peak levels and also setting new highs in the ratio to the growth index (in blue). These levels represent extreme concentration of performance in just the 5 largest mega cap stocks.

Mega caps are in wide divergence from the rest of the market in the most unusual year I have ever seen with enormous gains extremely concentrated in a few mega cap stocks. The Nasdaq will be rebalancing these most highly over-weighted stocks at the end of July, but other indices like the S&P 500 will continue without changes.

Why do finance companies admit that "timing is everything," but when it comes to investing your money the majority tell their clients to "just buy/hold and try to ignore the downturns?" I submit most investors would rely on timing signals, but without a model like the gauges they are forced to try to keep their clients in buy/hold positions for 24 months with no gains, or worse.

If timing helps you gain just 1% a week, you will significantly outperform all the long term market averages.

Long time members know, we can consistently beat the markets by avoiding the most negative weeks and loading up during the most positive signals. Only the financial industry has incentives to make you to stay in the markets year round.

2023 Market Outlook

The Fed has finally paused after delivering 10 consecutive rate hike in the fastest series of increases since 1977. Currently there is an 89% expected probability of an 11th rate hike at the Fed's next decision on July 26th. Historically such high rates have led to a market correction after every rate hiking cycle in US history. Also we still have the largest QT program in history ongoing to reduce the Fed's balance sheet at the fastest rate ever conducted with target levels of -$97 billion per month.

My strategy for 2023 is to stay generally bearish while adjusting for large bear bounces in anticipation of strong similarities to the August 2022 topping pattern. Economic data, inflation, inverted yield curves, manufacturing declines, home sale declines, and the latest banking crisis in March continue to show recessionary weakness into rising interest rate hikes at the highest levels since Sep 2007.

Some of my forecast articles for 2023 are here for your benefit.

• Forecasting The S&P 500 For 2023: Year Of The Fed-Pivot And More Record Volatility ( SP500 )
• My Response To The SA Roundtable: 2023 Technical Analysis / Quantitative Look Ahead

Weekly Breakout 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). Both models are outperforming last year's weekly returns.

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.

Following only positive Momentum Gauge signals for 2023, the MDA Breakout picks are up +108.33% average cumulative return with a worst case minimal return +31.94% in 18 weeks.

V&M Multibagger List

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 153 weekly picks with over 100%+ gains, 66 picks over 200%+, 19 picks over 500%+ and 8 weekly picks with over 1000%+ gains since January 2019 such as:

• Celsius Holdings ( CELH ) +3,157.6%
• Alexco Resources AXU +1,375.1%
• Enphase Energy ( ENPH ) +1,186.6%
• Super Micro Computer ( SMCI ) +1156.5%
• Trillium Therapeutics TRIL +1,008.7%

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 Performance Measurements

Historical MDA Breakout minimal buy/hold (worst case) returns have a compound average growth rate of 37.1% and cumulative minimum returns of +934.4% from 2017. 2023 still represents a partial year. Last year 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 result could be compounded weekly as separate portfolios.

The Week 29 - 2023 Breakout Stocks for next week are:

The picks for next week consist of 2 Healthcare, 1 Communications, and 1 Technology sector stocks. These selections are released in advance to members every Friday with strong current gains shown. It is not possible to duplicate published returns without member access to exclusive Friday morning release. 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 -- readers are cautioned to follow the Momentum Gauges for the best results.

1. Axonics ( AXNX ) - Healthcare / Medical Devices
2. Jiayin Group ( JFIN ) - Communication Services / Internet Content

Axonics - Healthcare / Medical Devices

Price Target: $65/share (Analyst Consensus + Technical See my FAQ #20)

(Source: Company Resources)

Axonics, Inc., a medical technology company, engages in the development and commercialization of novel products for the treatment of bladder and bowel dysfunction.

Jiayin Group - Communication Services / Internet Content

Price Target: $8.50/share (Analyst Consensus + Technical See my FAQ #20)

(Source: Company Resources)

Jiayin Group Inc. provides online consumer finance services in the People's Republic of China. The company operates a fintech platform that facilitates transparent, secure, and fast connections between individual borrowers and financial institutions funding partners. It also offers referral services for investment products offered by the financial service providers; and software development, risk control, marketing support, and IT assistance services.

Top Dow 30 Stocks to Watch for Week 29

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. Third, the 30 Dow stocks are up only +4.11% YTD and continue among the worst performing index YTD as crowding into Tech / Nasdaq continues. 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 large cap breakout stocks, I recommend these long term portfolios with consecutive years of beating the S&P 500 and already achieving double-digit returns. As regular readers know, we broke out of the terrible market chop for June and are moving in the strongest positive signal since January.

Current Portfolio returns

The long term buy/hold portfolios Piotroski-Graham, Positive Forensic, and Negative Forensic have all new mid-year portfolios released the end of June and tracked for the next 2-years.

New mid-year 2023 Piotroski-Graham enhanced value -

• January portfolio +32.54% YTD
• 2022 January portfolio beat the S&P 500 by +32.54%

New mid-year 2023 Positive Forensic -

• January portfolio +15.90% YTD
• January 2022 Positive Forensic beat S&P 500 by +6.59%

New mid-year 2023 Negative Forensic -

• January portfolio +6.14% YTD
• January 2022 Negative Forensic beat S&P 500 by +22.18%

New July Growth & Dividend Mega cap breakouts -

• New July mega cap long term portfolio was just released +0.97%
• January 2022 portfolio beat S&P 500 by +13.91%

These long term portfolio selections have significantly outperformed many major hedge funds and all the hedge fund averages since inception.

The Dow pick for next week is:

UnitedHealth Group (UNH)

UnitedHealth reported strong earnings and raised the earnings outlook for 2023. Indicators are all improving sharply on the news and price is likely to retest the top of the negative channel around 500/share if not breakout higher on the positive news.

Active and Momentum Gauge ETF tracking

A separate article will go out this week on the ETF/ETN trading activity highlighting the strongest momentum gainers for next week. The early negative test signal started on Friday after three days of rising negative momentum values. The "official" MG signal continues positive from June 1st led by member funds NAIL +67.1% and FNGU +27.5%

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.

New Feature

A major new feature is coming this year. After a period of evaluation and improvement we will announce the release of MDA stock charts and breakout signals / breakdown signals. An example using D.R. Horton from the Premium Portfolio is shown below:

The current format shows the Segment 6 breakout levels in green, the Segment 2 breakdown values in red, and the middle conditions Segments 3-5 combined in yellow. The charts are adjustable over different time periods and can leverage signals from the Market, S&P 500, and individual Sector Gauges. Feedback and testing will continue to improve my service offerings as I focus on what is most important to you. Much more to come!!

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.

All the V&M portfolio models beat the market indices again last year with consistent outperformance of the major indices since 2017. All new portfolios are in a strong start to 2023 with many portfolios already in double-digit returns. Remember to follow the Momentum Gauges® in your investing decisions for the best results. YTD returns do not show the peak gains following the signals.

All the very best to you, stay safe and healthy and have a great week of trading!

JD Henning, PhD, MBA, CFE, CAMS

For further details see:

July MDA Breakout Stocks Week 29 - 2023: High-Frequency Gainers To Give You An Edge