Picking a winning trade on a consistent basis is not simply a stroke of luck. It’s the result of calculated screening, planning, and deliberation.
With this in mind, today we’re starting a new weekly series on our top 10 stocks to watch this week — stocks that look poised for a possible breakout in the coming days. Traders should add these stocks to their watchlist now.
The Top 10 Stocks to Watch This Week for Possible Breakouts
| Stock # | Name of the Stock | Stock Ticker | Last Close | Buy Level(s) | Reason |
| 1 | Apollo Medical Holdings, Inc. | NASDAQ: AMEH | $18.28 | $19.50 | Ascending Triangle Pattern |
| 2 | Principal Financial Group, Inc. | NASDAQ: PFG | $41.20 | $43.50 | Symmetrical Triangle Pattern |
| 3 | Walgreens Boots Alliance, Inc. | NASDAQ: WBA | $37.41 | $40.00 | Falling Wedge Pattern |
| 4 | Alcoa Corporation | NYSE: AA | $12.62 | $16.75; $12.75 (higher risk) | Ascending Triangle Pattern |
| 5 | First Midwest Bancorp, Inc. | NASDAQ: FMBI | $11.93 | $16.10; $12.50 (higher riks) | Double Bottom Pattern, Descending Triangle Pattern |
| 6 | Ashland Global Holdings Inc. | NYSE: ASH | $76.34 | $80.00 | Ascending Triangle Pattern |
| 7 | ACM Research, Inc. | NASDAQ: ACMR | $75.60 | $82.40 | Uptrend Channel (near lower rail support) |
| 8 | AtriCure, Inc. | NASDAQ: ATRC | $40.69 | $45.00 | Uptrend channel, Downtrend channel |
| 9 | Integra LifeSciences Holdings Corporation | NASDAQ: IART | $48.46 | $53.50 | Symmetrical Triangle Pattern, Ascending Triangle Pattern |
| 10 | United Therapeutics Corporation | NADAQ: UTHR | $115.00 | $117.00 | Downtrend channel breakout |
Important: Typically, these trades offer a risk: reward ratio of 1:2 or 1:3 in the next 6 months, which implies 2x to 3x rewards when compared to risks. So, be sure to set your stop-loss levels and target prices accordingly to manage your risk. In addition, these trade ideas are triggered using daily closing prices, not intra-day pricing. So if you participate in these trades, make sure that you only buy the stock once its daily close is above the recommended price level.
That said, here are the top 10 stocks to watch for a breakout, in no particular order…
#1 Apollo Medical Holdings, Inc. (NASDAQ: AMEH)
Sector: Healthcare | Medical Care Facilities
Reason: Formation of an Ascending Triangle Pattern
An ascending triangle pattern is a bullish pattern formed by drawing a horizontal line along the swing highs, and a rising trendline along the swing lows. These two lines result in the formation of a triangle. A breakout from this pattern is typically a strong bullish indication.
Buy Level(s): The ideal buy level for AMEH is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $19.50. This is marked in the chart below as a green color dotted line.
Daily chart – AMEH
#2 Principal Financial Group, Inc. (NASDAQ: PFG)
Sector: Financial | Insurance – Diversified
Reason: Formation of a Symmetrical Triangle Pattern
A symmetrical triangle is a chart pattern formed by two converging trend lines connecting a series of sequential peaks and troughs. These two lines result in the formation of a triangle that appears to be symmetrical.
A symmetrical triangle pattern is usually formed when there is an indecision in the price movements and there is uncertainty among the buyers and sellers. This chart pattern represents a period of consolidation before the price breaks out or breaks down. In case a breakout occurs from the upper trend line, it is a strong bullish indication as it signifies the start of a new bullish trend.
Buy Level(s): The ideal buy level for PFG is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $43.50. This is marked in the chart below as a green color dotted line.
Daily chart – PFG
#3 Walgreens Boots Alliance, Inc. (NASDAQ: WBA)
Sector: Healthcare | Pharmaceutical Retailers
Reason: Formation of a Falling Wedge Pattern
A falling wedge pattern is formed by joining two downward-sloping, converging trendlines having a contracting range. The pattern appears to be wide at the top and continues to contract as prices fall. A breakout from a falling wedge pattern can indicate either reversal or continuation depending on where the pattern appeared in the trend.
A stock that has broken out of a falling wedge pattern would have gained momentum and would have the potential to move higher.
Buy Level(s): The ideal buy level for WBA is if the stock breaks out of the falling wedge pattern as well as close above the immediate resistance level of $40.00. This is marked in the chart below as a green color dotted line.
Daily chart – WBA
#4 Alcoa Corporation (NYSE: AA)
Sector: Basic Materials | Aluminum
Reason: Formation of an Ascending Triangle Pattern
Note: Please refer to stock #1 AMEH for more details on the ascending triangle chart pattern.
Buy Level(s): The ideal buy level for AA is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $16.75. This is marked in the chart below as a green color dotted line.
However, the stock has currently moved higher after taking support at the uptrend line. Therefore, those with higher risk appetite can purchase half the intended quantity of shares of AA above yesterday’s close at around $12.75. This is marked in the chart below as an orange color dotted line.
Daily chart – AA
#5 First Midwest Bancorp, Inc. (NASDAQ: FMBI)
Sector: Financial | Banks – Regional
Reason: Formation of a Double Bottom Pattern, Descending Triangle Pattern
A Double Bottom Pattern looks like the letter W and is characterized by two well-defined lows at approximately the same price level. This twice-touched low is usually a very strong support level. The high point between the two bottoms’ resistance level is called as a neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
A descending triangle pattern is formed by drawing a falling trendline that connects a series of lower highs and a horizontal line along a series of lows. These two lines result in the formation of a triangle. This is usually a bearish pattern. However, any upward breakout from a bearish pattern like a Descending Triangle is a strong bullish sign.
Buy Level(s): The ideal buy level for FMBI is above the neckline of the double bottom pattern, at around $16.10. This is marked in the chart below as a green color dotted line.
However, those with a higher risk appetite can purchase half the intended quantity of shares of FMBI above the breakout level of a descending triangle pattern at around $12.50. This is marked in the chart below as an orange color dotted line.
Daily chart – FMBI
#6 Ashland Global Holdings Inc. (NYSE: ASH)
Sector: Basic Materials | Chemicals
Reason: Formation of an Ascending Triangle Pattern
Note: Please refer to stock #1 AMEH for more details on the ascending triangle chart pattern.
Buy Level(s): The ideal buy level for ASH is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $80.00. This is marked in the chart below as a green color dotted line.
Daily chart – ASH
#7 ACM Research, Inc. (NASDAQ: ACMR)
Sector: Technology | Semiconductor Equipment & Materials
Reason: Formation of an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for ACMR is if the stock closes above the immediate resistance level of $82.40. This is marked in the chart below as a green color dotted line.
Daily chart – ACMR
#8 AtriCure, Inc. (NASDAQ: ATRC)
Sector: Healthcare | Medical Instruments & Supplies
Reason: Formation of an Uptrend Channel, Downtrend Channel
A downtrend or descending channel is the price action contained between downward sloping parallel lines. It is formed by two lines that are drawn by connecting the lower highs and lower lows of a stock’s price. Even though this is typically a bearish pattern, a breakout from the upper rail of this pattern is considered as a good bullish indication.
Note: Please refer to stock #7 ACMR for more details on the uptrend channel.
Buy Level(s): The ideal buy level for ATRC is if the stock breaks out of the downtrend channel and closes above the immediate resistance level of $45.00. This is marked in the chart below as a green color dotted line.
Daily chart – ATRC
#9 Integra LifeSciences Holdings Corporation (NASDAQ: IART)
Sector: Healthcare | Medical Devices
Reason: Formation of a Symmetrical Triangle Pattern, Ascending Triangle Pattern.
Note: Please refer to stock #2 PFG for more details on the symmetrical triangle chart pattern; and stock #1 AMEH for more details on the ascending triangle chart pattern.
Buy Level(s): The ideal buy level for IART is if the stock has a daily close above the breakout level of the ascending triangle as well as the symmetrical triangle pattern, at around $53.50. This is marked in the chart below as a green color dotted line.
Daily chart – IART
#10 United Therapeutics Corporation (NASDAQ: UTHR)
Sector: Healthcare | Biotechnology
Reason: Downtrend Channel Pattern Breakout
Note: Please refer to stock #8 ATRC for more details on the downtrend channel.
Buy Level(s): The daily chart shows that the stock has currently broken out of a downtrend channel. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for UTHR is if the stock has a daily close above the $117.00. This is marked in the chart below as a green color dotted line.
Daily chart – UTHR
Happy Trading!
Trades of The Day Research Team
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