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 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
| Sl # | Name of the Stock | Stock Ticker | Last Close | Buy Level(s) | Reason |
| 1 | Camden Property Trust | NYSE: CPT | $92.24 | $100 | Ascending Triangle Pattern |
| 2 | United Bankshares Inc. | NASDAQ: UBSI | $26.23 | $27.50 | Downtrend Channel |
| 3 | Covanta Holding Corporation | NYSE: CVA | $9.08 | $11.00 | Double Bottom Pattern, Downtrend Channel |
| 4 | New Jersey Resources Corporation | NYSE: NJR | $29.18 | $33.50 | Falling Wedge Pattern |
| 5 | KalVista Pharmaceuticals, Inc. | NASDAQ: KALV | $17.21 | $18.30 | Uptrend Channel |
| 6 | The Bancorp, Inc. | NASDAQ: TBBK | $9.60 | $11.00 | Symmetrical Triangle Pattern Breakout, Ascending Triangle Pattern |
| 7 | Allakos Inc. | NASDAQ: ALLK | $95.13 | $100.00 | Uptrend Channel |
| 8 | Heritage-Crystal Clean, Inc | NASDAQ: HCCI | $16.48 | $18.50 | Downtrend Channel |
| 9 | BlackLine, Inc. | NASDAQ: BL | $97.68 | $105.50 | Uptrend Channel |
| 10 | Enviva Partners, LP | NYSE: EVA | $42.85 | $44 | Rising Wedge 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 Camden Property Trust (NYSE: CPT)
Sector: Real Estate | REIT – Residential
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 CPT is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $100. This is marked in the chart below as a green color dotted line.
Daily chart – CPT
Daily Chart – CPT – Ascending Triangle Pattern
#2 United Bankshares, Inc. (NASDAQ: UBSI)
Sector: Financial | Banks – Regional
Reason: Formation of a 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 a good bullish indication.
Buy Level(s): The ideal buy level for UBSI is above the breakout level of the downtrend channel, as well as above the 200-day SMA. This translates to a price of around $27.50. This is marked in the chart below as a green color dotted line.
Daily chart – UBSI
Daily Chart – UBSI – Downtrend Channel
#3 Covanta Holding Corporation (NYSE: CVA)
Sector: Industrials | Waste Management
Reason: Formation of a Double Bottom Pattern, Downtrend Channel
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.
Note: Please refer to stock #2 United Bankshares, Inc. (NASDAQ: UBSI) for more details on the Downtrend Channel.
Buy Level(s): The ideal buy level for CVA is above the neckline of the double bottom pattern, at around $11.00. This is marked in the chart below as a green color dotted line.
Daily chart – CVA
Daily Chart – CVA – Double Bottom Pattern, Channel
#4 New Jersey Resources Corporation (NYSE: NJR)
Sector: Utilities | Utilities – Regulated Gas
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 NJR is if the stock breaks out of the falling wedge pattern as well as close above the immediate resistance level of 200-day SMA. This translates to a price of around $33.50. This is marked in the chart below as a green color dotted line.
Daily chart – NJR
Daily Chart – NJR – Falling Wedge Pattern
#5 KalVista Pharmaceuticals, Inc. (NASDAQ: KALV)
Sector: Healthcare | Biotechnology
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 KALV is if the stock has a daily close above the breakout level of the uptrend channel and above the near-term resistance area. This translates to a price of around $18.30. This is marked in the chart below as a green color dotted line.
Daily chart – KALV
Daily Chart – KALV – Uptrend Channel
#6 The Bancorp, Inc. (NASDAQ: TBBK)
Sector: Financial | Banks – Regional
Reason: Symmetrical Triangle pattern breakout, formation of an Ascending 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.
Note: Please refer to stock #1 Camden Property Trust (NYSE: CPT) for more details on the ascending triangle chart pattern.
Buy Level(s): The stock has currently broken out of a symmetrical triangle pattern. However, the ideal buy level for TBBK is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $11.00. This is marked in the chart below as a green color dotted line.
Daily chart – TBBK
Daily Chart – TBBK – Ascending Triangle Pattern, Symmetrical Triangle Breakout
#7 Allakos Inc. (NASDAQ: ALLK)
Sector: Healthcare | Biotechnology
Reason: Formation of an Uptrend Channel
Note: Please refer to stock #5 KalVista Pharmaceuticals, Inc. (NASDAQ: KALV) for more details on the uptrend channel.
Buy Level(s): The ideal buy level for ALLK is if the stock has a daily close above the breakout level of the uptrend channel at a price of around $100.00. This is marked in the chart below as a green color dotted line.
Daily chart – ALLK
Daily Chart – ALLK – Uptrend Channel
#8 Heritage-Crystal Clean, Inc. (NASDAQ: HCCI)
Sector: Industrials | Waste Management
Reason: Formation of a Downtrend Channel
Note: Please refer to stock #2 United Bankshares, Inc. (NASDAQ: UBSI) for more details on the Downtrend Channel.
Buy Level(s): The ideal buy level for HCCI is above the breakout level of the downtrend channel, at a price of around $18.50. This is marked in the chart below as a green color dotted line.
Daily chart – HCCI
Daily Chart – HCCI – Downtrend Channel
#9 BlackLine, Inc. (NASDAQ: BL)
Sector: Technology | Software – Infrastructure
Reason: Formation of an Uptrend Channel
Note: Please refer to stock #5 KalVista Pharmaceuticals, Inc. (NASDAQ: KALV) for more details on the uptrend channel.
Buy Level(s): The ideal buy level for BL is if the stock has a daily close above the breakout level of the uptrend channel at a price of around $105.50. This is marked in the chart below as a green color dotted line.
Daily chart – BL
Daily Chart – BL – Uptrend Channel
#10 Enviva Partners, LP (NYSE: EVA)
Sector: Basic Materials | Lumber & Wood Production
Reason: Formation of a Rising Wedge Pattern
A rising wedge pattern is formed by the two converging trend lines when the price of the stock rises over a certain time period. This is typically considered a bearish pattern. However, a breakout from the upper rail of a rising wedge pattern is usually considered a bullish sign.
Buy Level(s): The ideal buy level for EVA is above the breakout level of the Rising Wedge Pattern. This translates to a price of around $44.00. This is marked in the chart below as a green color dotted line.
Daily chart – EVA
Daily Chart – EVA – Rising Wedge Pattern
Happy Trading!
Trades of The Day Research Team
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