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, we have started a 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
| Sl # | Name of the Stock | Stock Ticker | Last Close | Buy Level(s) | Reason |
| 1 | Community Trust Bancorp, Inc. | NASDAQ: CTBI | $32.68 | $36.70 | Double Bottom Pattern |
| 2 | The First of Long Island Corporation | NASDAQ: FLIC | $16.48 | $18.20 | Ascending Triangle Pattern |
| 3 | Prestige Consumer Healthcare Inc. | NYSE: PBH | $34.17 | $39.00 | Symmetrical Triangle Pattern |
| 4 | Encore Wire Corporation | NASDAQ: WIRE | $48.54 | $50.00 | Uptrend Channel |
| 5 | American States Water Company | NYSE: AWR | $79.23 | $80.50 | Falling Wedge Pattern Breakout |
| 6 | International Seaways, Inc. | NYSE: INSW | $14.13 | $16.10 | Symmetrical Triangle Pattern |
| 7 | Healthpeak Properties, Inc. | NYSE: PEAK | $28.77 | $30.00 | Ascending Triangle Pattern |
| 8 | EMCOR Group, Inc. | NYSE: EME | $70.67 | $75.00 | Symmetrical Triangle Pattern |
| 9 | Southwest Airlines Co. | NYSE: LUV | $42.79 | $43.60 | Ascending Triangle Pattern |
| 10 | Avid Technology, Inc. | NASDAQ: AVID | $9.35 | $10.00 | Ascending Triangle Pattern |
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 Community Trust Bancorp, Inc. (NASAQ: CTBI)
Sector: Financial | Banks – Regional
Reason: Formation of a Double Bottom 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 a neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
Buy Level(s): The ideal buy level for CTBI is above the neckline of the double bottom pattern, at around $36.70. This is marked in the chart below as a green color dotted line.
Daily chart – CTBI
Daily Chart – CTBI – Double Bottom Pattern
#2 The First of Long Island Corporation (NASDAQ: FLIC)
Sector: Financial | Banks – Regional
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 FLIC is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $18.20. This is marked in the chart below as a green color dotted line.
Daily chart – FLIC
Daily Chart – FLIC – Ascending Triangle Pattern
#3 Prestige Consumer Healthcare Inc. (NYSE: PBH)
Sector: Healthcare | Medical Distribution
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 PBH is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, and closes above the longer-term moving average of 200-day SMA. This translates to a price of around $39.00. This is marked in the chart below as a green color dotted line.
Daily chart – PBH
Daily Chart – PBH – Symmetrical Triangle Pattern
#4 Encore Wire Corporation (NASDAQ: WIRE)
Sector: Industrials | Electrical Equipment & Parts
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 WIRE is if the stock has a daily close above the resistance level of the downtrend line (marked as an orange color dotted line) and above the longer-term moving average of 200-day SMA. This translates to a price of around $50.00. The entry level is marked in the chart below as a green color dotted line.
Daily chart – WIRE
Daily Chart – WIRE – Uptrend Channel
#5 American States Water Company (NYSE: AWR)
Sector: Utilities | Utilities – Regulated Water
Reason: Falling Wedge Pattern Breakout
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): Even though the stock has currently broken out of the falling wedge pattern, the ideal buy level for AWR is above the 200-day SMA. This translates to a price of around $80.50. This is marked in the chart below as a green color dotted line.
Daily chart – AWR
Daily Chart – AWR- Falling Wedge Pattern Breakout
#6 International Seaways, Inc. (NYSE: INSW)
Sector: Industrials | Marine Shipping
Reason: Formation of a Symmetrical Triangle Pattern
Note: Please refer to stock #3 Prestige Consumer Healthcare Inc. (NYSE: PBH) for more details on the symmetrical triangle chart pattern.
Buy Level(s): The ideal buy level for INSW is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $16.10. This is marked in the chart below as a green color dotted line.
Daily chart – INSW
Daily Chart – INSW- Symmetrical Triangle Pattern
#7 Healthpeak Properties, Inc. (NYSE: PEAK)
Sector: Real Estate | REIT – Healthcare Facilities
Reason: Formation of an Ascending Triangle Pattern
Note: Please refer to stock #2 The First of Long Island Corporation (NASDAQ: FLIC) for more details on the ascending triangle chart pattern.
Buy Level(s): The ideal buy level for PEAK is if the stock has a daily close above the breakout level of the ascending triangle pattern, and above the near-term resistance level. This translates to a price of around $30.00. This is marked in the chart below as a green color dotted line.
Daily chart – PEAK
Daily Chart – PEAK – Ascending Triangle Pattern
#8 EMCOR Group, Inc. (NYSE: EME)
Sector: Industrials | Engineering & Construction
Reason: Formation of a Symmetrical Triangle Pattern
Note: Please refer to stock #3 Prestige Consumer Healthcare Inc. (NYSE: PBH) for more details on the symmetrical triangle chart pattern.
Buy Level(s): The ideal buy level for EME is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $75.00. This is marked in the chart below as a green color dotted line.
Daily chart – EME
Daily Chart – EME – Symmetrical Triangle Pattern
#9 Southwest Airlines Co. (NYSE: LUV)
Sector: Industrials | Airlines
Reason: Formation of an Ascending Triangle Pattern
Note: Please refer to stock #2 The First of Long Island Corporation (NASDAQ: FLIC) for more details on the ascending triangle chart pattern.
Buy Level(s): The ideal buy level for LUV is if the stock has a daily close above the breakout level of the ascending triangle pattern at around $43.60. This is marked in the chart below as a green color dotted line.
Daily chart – LUV
Daily Chart – LUV – Ascending Triangle Pattern
#10 Avid Technology, Inc. (NASDAQ: AVID)
Sector: Communication Services | Electronic Gaming & Multimedia
Reason: Formation of an Ascending Triangle Pattern
Note: Please refer to stock #2 The First of Long Island Corporation (NASDAQ: FLIC) for more details on the ascending triangle chart pattern.
Buy Level(s): The daily chart shows that the stock has currently broken out of an ascending triangle pattern. However, there is a near-term resistance area for the stock. Hence, the ideal buy level for AVID is if the stock has a daily close above $10.00. This is marked in the chart below as a green color dotted line.
Daily chart – AVID
Daily Chart – AVID- Ascending Triangle Pattern Breakout
Happy Trading!
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