June MDA Breakout Stocks/ETFs Week 26 - 2023: High-Frequency Gainers To Give You An Edge

Introduction

For readers who want to skip the details, avoid market updates, bypass the Momentum Gauge charts, and blow off the analysis behind the selection methodologies spanning more than a decade of research, here are the sample MDA Breakout picks for next week:

• Celsius Holdings (CELH)
• The Vita Coco Company (COCO)

Dow pick:

• Coca-Cola (KO)

This is a week of defensive beverage picks as the Momentum Gauges are declining sharply from June highs. For the rest of you this article addresses more than seven years of questions, links to trading strategies, years of measurement results, and gives additional investing opportunities to consider this year.

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 300 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 monthly Growth & Dividend mega cap breakout portfolios if you are looking for larger cap selections 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 26

Be careful. Market daily momentum gauges and S&P 500 gauges continue to decline from peak levels in June with the early negative test signal activated for members this week. More sectors are turning negative to the worst levels since March.

• Guide: Maximizing Market Returns With The Automated Momentum Gauges

The June rally shown below was the strongest positive Momentum Gauge signal we have had since the January breakout. We are now in the early negative signal with more than 3 days of consecutive declines in positive momentum and rising negative momentum values. We could see an "official" negative signal with a crossover of higher negative momentum this coming week.

Watch the Mega caps closely! If they breakdown again the market will breakdown sharply. The largest 5 mega cap stocks are testing the peak levels back to 2020 and for 2022 highs relative to the rest of the S&P 1000 stocks. You can see exactly how these 5 mega cap stocks have contributed to the largest VIX volatility swings in alternating years:

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. 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 -$95 billion per month. My latest outlook articles are here:

• Momentum Mojo: Alternating Segment Breakouts Favor Oversold Value And Small Caps
• Momentum Memo: Biggest Shift Into Lagging Value Sectors In Friday Breakout

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, manufacturing productivity, home sales, and the latest banking crisis continue to show recessionary weakness into rising interest rate hikes at the highest levels since Sep 2007.

Mid-year 2023 is nearly here and things may get interesting with potential for a Fed pivot. Dip-buyers will continue to try to pull this anticipated pivot event forward in time extending high market volatility while the Fed hikes rates.

The new June Russell Reconstitution anomaly we found last year will be released this coming week with all new selections for 2024. The past study actively tracked on the dashboard:

• FTSE Russell Reconstitution Anomaly Study - Strong +22.7% Difference After 5 Months
• Abnormal Returns Of The Russell Index Reconstitution Anomaly: New 2023 Study

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
• Value, Momentum Breakout View: Debt Ceiling 'Extraordinary Measures' And Fed's QT Program

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 +83.8% average cumulative return with a worst case minimal return +15.76% in 15 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 135 weekly picks with over 100%+ gains, 61 picks over 200%+, 20 picks over 500%+ and 6 weekly picks with over 1000%+ gains since January 2019 such as:

• Celsius Holdings (CELH) +3,093.6% (also back on the breakout list again)
• Alexco Resources AXU +1,257.5%
• Enphase Energy (ENPH) +1,047.43%
• 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 34.1% and cumulative minimum returns of +819.8% 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 26 - 2023 Breakout Stocks for next week are:

The picks for next week consist of 1 Financial, 2 Consumer Defensive and 1 Communication sector stocks. These selections are released in advance to members every Friday with current gains shown. 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. Celsius Holdings (CELH) - Consumer Defensive / Beverages
2. Vita Coco Company (COCO) - Consumer Defensive / Beverages

Celsius Holdings (CELH) - Consumer Defensive / Beverages

Price Target: $170/share (Analyst Consensus + Technical See my FAQ #20)

(Source: Company Resources)

Celsius Holdings, Inc. develops, processes, markets, distributes, and sells functional drinks and liquid supplements in the United States and internationally. The company offers various carbonated and non-carbonated functional energy drinks under the CELSIUS Originals name; dietary supplement in carbonated flavors, including apple jack'd, orangesicle, inferno punch, cherry lime, blueberry pomegranate, strawberry dragon fruit, tangerine grapefruit, and jackfruit under the CELSIUS HEAT name; and branched-chain amino acids functional energy drink that fuels muscle recovery under the CELSIUS BCCA+ENERGY name.

Vita Coco Company (COCO) - Consumer Defensive / Beverages

Price Target: $40.0/share (Analyst Consensus + Technical See my FAQ #20)

(Source: Company Resources)

The Vita Coco Company, Inc. develops, markets, and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, and the Asia Pacific. The company offers coconut oil and coconut milk; Hydration Drink Mix, a powdered form of flavored coconut water; sparkling water; Runa, a plant-based energy drink; purified water under the Ever & Ever brand name; and PWR LIFT, a protein-infused fitness drink.

Top Dow 30 Stocks to Watch for Week 26

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 +1.7% 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 Long-Term Portfolio returns

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

New 2023 Piotroski-Graham enhanced value -

• New January portfolio +27.13% YTD
• 2022 January portfolio beat the S&P 500 by +32.54%

New 2023 Positive Forensic -

• New January portfolio +11.83% YTD
• January 2022 Positive Forensic beat S&P 500 by +6.59%

New 2023 Negative Forensic -

• New January portfolio +5.13% YTD
• January 2022 Negative Forensic beat S&P 500 by +22.18%

New Growth & Dividend Mega cap breakouts -

• New June mega cap long term portfolio is up +0.11%
• 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 picks for next week are:

The Coca Cola Company (KO)

Coca Cola has rebounded in early breakout conditions above 61/share resistance toward prior May highs. Net MFI inflows are strong with increasing volume and analysts still have a consensus target of $70/share. Institutions are net buyers and dividend yield is a high 3%. This is a strong defensive stock when markets turn negative.

Breakout ETF Portfolios

Consumer Cyclical Momentum Gauges triggered a negative signal this week along with three other sectors. The (WANT) fund shown in yellow as a proxy for consumer cyclicals is showing a sell signal from Friday. Declines from these recent highest positive momentum levels since February generally provide strong signals that carry into negative conditions as we saw back in March.

The Active ETF portfolio is up +16.28% YTD with most of the gains this week in bear funds on early negative signals. The largest gains this week came from -3x Semiconductor bear (SOXS) +8.79%, -3x Russell Index bear (TZA) +4.18%, and -3x Big Bank Index bear (BNKD) +3.66%

The Momentum Gauge ETF Bull/Bear model signal changes are shown below. These are member selected test funds and returns can be improved by following individual sector gauges (not just the broad gauge signal shown below) and gauges specific to each of the different types of funds. Be sure to read the Momentum Gauge guide for best results.

Returns shown here are for signals lasting longer than 3 days.

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.

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

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