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 recently 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 | Vista Outdoor Inc. | NYSE: VSTO | $23.50 | $25.20 | Uptrend Channel |
| 2 | PTC Therapeutics, Inc. | NASDAQ: PTCT | $59.38 | $61.70 | Ascending Triangle Pattern Breakout |
| 3 | Provention Bio, Inc. | NASDAQ: PRVB | $13.36 | $15.60 | Symmetrical Triangle Pattern |
| 4 | Hilton Worldwide Holdings Inc. | NYSE: HLT | $92.84 | $96.00 | Ascending Triangle Pattern |
| 5 | Flushing Financial Corporation | NASDAQ: FFIC | $11.98 | $14.00 | Consolidation Area |
| 6 | AllianzGI Diversified Income & Convertible Fund | NYSE: ACV | $27.70 | $28.00 | Ascending Triangle Pattern Breakout |
| 7 | MGIC Investment Corporation | NYSE: MTG | $10.78 | $11.20 | Rising Wedge Pattern Breakout |
| 8 | The Coca-Cola Company | NYSE: KO | $49.45 | $52.30 | Symmetrical Triangle Pattern |
| 9 | Glu Mobile Inc. | NASDAQ: GLUU | $8.79 | $11.00 | Cup and Handle Pattern |
| 10 | Square, Inc. | NYSE: SQ | $198.08 | $202.00 | Uptrend Channel |
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 Vista Outdoor Inc. (NYSE: VSTO)
Sector: Consumer Cyclical | Leisure
Reason: Formation of an Uptrend Channel in Daily Chart
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 VSTO is if the stock breaks out of the uptrend channel and close above the immediate resistance level, at a price of around $25.20. This is marked in the chart below as a green color dotted line.
Daily chart – VSTO
Daily Chart – VSTO – Uptrend Channel
#2 PTC Therapeutics, Inc. (NASDAQ: PTCT)
Sector: Healthcare | Biotechnology
Reason: Breakout from an Ascending Triangle Pattern in the Daily Chart
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): Although the stock has currently broken out of an ascending triangle pattern the ideal buy level for PTCT is if it has a daily close above the previous high. This translates to a price of around $61.70. This is marked in the chart below as a green color dotted line.
Daily chart – PTCT
Daily Chart – PTCT – Ascending Triangle Pattern Breakout
#3 Provention Bio, Inc. (NASDAQ: PRVB)
Sector: Healthcare | Biotechnology
Reason: Formation of a Symmetrical Triangle Pattern in the Daily Chart
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 PRVB is if the stock breaks out of the symmetrical triangle pattern and close above the immediate resistance level, at a price of around $15.60. This is marked in the chart below as a green color dotted line.
Daily chart – PRVB
Daily Chart – PRVB – Symmetrical Triangle Pattern
#4 Hilton Worldwide Holdings Inc. (NYSE: HLT)
Sector: Consumer Cyclical | Lodging
Reason: Formation of an Ascending Triangle Pattern in the Daily Chart
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 HLT is if the stock has a daily close above the breakout level of the ascending triangle pattern. This translates to a price of around $96.00. This is marked in the chart below as a green color dotted line
Daily chart – HLT
Daily Chart – HLT – Ascending Triangle Pattern
#5 Flushing Financial Corporation (NASDAQ: FFIC)
Sector: Financial | Banks – Regional
Reason: Formation of a Consolidation Area in the Daily Chart
A Consolidation Area is a price action contained between two parallel lines. It is formed by a lower line that connects the lows, and an upper line that joins the highs. A stock usually trades between the two lines of the consolidation area before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for FFIC is if the stock has a daily close above the breakout level of the consolidation area, at around $14.00. This is marked in the chart below as a green color dotted line.
Daily chart – FFIC
Daily Chart – FFIC – Consolidation Area
#6 AllianzGI Diversified Income & Convertible Fund (NYSE: ACV)
Sector: Financial | Asset Management
Reason: Breakout from an Ascending Triangle Pattern in the Daily Chart
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): Although the stock has currently broken out of an ascending triangle pattern the ideal buy level for ACV is if it has a daily close above the price of around $28.00. This is marked in the chart below as a green color dotted line.
Daily chart – ACV
Daily Chart – ACV – Ascending Triangle Pattern
#7 MGIC Investment Corporation (NYSE: MTG)
Sector: Financial | Insurance – Specialty
Reason: Breakout from a Rising Wedge Pattern in Daily Chart
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 MTG is above the breakout level of the Rising Wedge Pattern. This translates to a price of around $11.00. This is marked in the chart below as a green color dotted line.
Daily chart – MTG
Daily Chart – MTG – Rising Wedge Pattern Breakout
#8 The Coca-Cola Company (NYSE: KO)
Sector: Consumer Defensive | Beverages – Non-Alcoholic
Reason: Formation of a Symmetrical Triangle Pattern in the Daily Chart
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 KO is if the stock breaks out of the symmetrical triangle pattern and closes above the immediate resistance level, at a price of around $52.30. This is marked in the chart below as a green color dotted line.
Daily chart – KO
Daily Chart – KO – Symmetrical Triangle Pattern
#9 Glu Mobile Inc. (NASDAQ: GLUU)
Sector: Communication Services | Electronic Gaming & Multimedia
Reason: Formation of a Cup and Handle Pattern in the Weekly Chart
A Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout. A Cup and Handle pattern is formed when the price initially declines, then levels off, and begins to rise again, forming a rounded cup-like structure.
The handle is then formed near the rim or lip of the cup, either sideways or declining price channel. A breakout from a cup and handle pattern is a strong bullish indication as it signifies the start of a new bullish trend.
Buy Level(s): The ideal buy level for GLUU is above the breakout level of the cup and handle pattern, at around $11.00. This is marked in the chart below as a green color dotted line.
Daily chart – GLUU
Weekly Chart – GLUU – Cup and Handle Pattern
#10 Square, Inc. (NYSE: SQ)
Sector: Technology | Software – Infrastructure
Reason: Formation of an Uptrend Channel in the Daily Chart
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 SQ is above the breakout level of the uptrend channel pattern, at around $202.00. This is marked in the chart below as a green color dotted line.
Daily chart – SQ
Daily Chart – SQ – Uptrend Channel
Happy Trading!
Trades of The Day Research Team
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