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 | TripAdvisor, Inc. | NASDAQ: TRIP | $25.48 | $27.20 | Uptrend Channel |
| 2 | Empire State Realty Trust, Inc. | NYSE: ESRT | $7.72 | $8.00 | Downtrend Channel Breakout |
| 3 | CommScope Holding Company, Inc. | NASDAQ: COMM | $10.80 | $11.50 | Ascending Triangle Pattern |
| 4 | ORIC Pharmaceuticals, Inc. | NASDAQ: ORIC | $24.01 | $26.50 | Consolidation Area |
| 5 | Keros Therapeutics, Inc. | NASDAQ: KROS | $58.90 | $63.00 | Ascending Triangle Pattern |
| 6 | Balchem Corporation | NASDAQ: BCPC | $106,21 | $110.00 | Symmetrical Triangle Pattern Breakout |
| 7 | Apple Inc. | NASDAQ: AAPL | $119.26 | $121.30 | Symmetrical Triangle Pattern |
| 8 | Columbia Property Trust, Inc. | NYSE: CXP | $12.63 | $13.50 | Symmetrical Triangle Pattern Breakout |
| 9 | American Airlines Group Inc. | NASDAQ: AAL | $12.24 | $15.00 | Symmetrical Triangle Pattern |
| 10 | Matrix Service Company | NASDAQ: MTRX | $9.24 | $10.20 | Falling Wedge Pattern 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 TripAdvisor, Inc. (NASDAQ: TRIP)
Sector: Consumer Cyclical | Travel Services
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 TRIP is above the breakout level of the uptrend channel pattern, at around $27.20. This is marked in the chart below as a green color dotted line.
Daily chart – TRIP
Daily Chart – TRIP – Uptrend Channel
#2 Empire State Realty Trust, Inc. (NYSE: ESRT)
Sector: Real Estate | REIT – Diversified
Reason: Breakout from 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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for ESRT is if it has a daily close above the 200-day MA. This translates to a price of around $8.00. This is marked in the chart below as a green color dotted line.
Daily chart – ESRT
Daily Chart – ESRT – Downtrend Channel Breakout
#3 CommScope Holding Company, Inc. (NASDAQ: COMM)
Sector: Technology | Communication Equipment
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 COMM is if the stock has a daily close above the breakout level of the ascending triangle pattern. This translates to a price of around $11.50. This is marked in the chart below as a green color dotted line.
Daily chart – COMM
Daily Chart – COMM – Ascending Triangle Pattern
#4 ORIC Pharmaceuticals, Inc. (NASDAQ: ORIC)
Sector: Healthcare | Biotechnology
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 ORIC is if the stock breaks out of the symmetrical triangle pattern and close above the immediate resistance level, at a price of around $26.50. This is marked in the chart below as a green color dotted line.
Daily chart – ORIC
Daily Chart – ORIC – Consolidation Area
#5 Keros Therapeutics, Inc. (NASDAQ: KROS)
Sector: Healthcare | Biotechnology
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 KROS is if the stock has a daily close above the breakout level of the ascending triangle pattern. This translates to a price of around $63.00. This is marked in the chart below as a green color dotted line.
Daily chart – KROS
Daily Chart – KROS – Ascending Triangle Pattern
#6 Balchem Corporation (NASDAQ: BCPC)
Sector: Basic Materials | Specialty Chemicals
Reason: Breakout from 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): Even though the stock has broken out of a symmetrical triangle pattern, the ideal buy level for BCPC is above the immediate resistance level, which translates to a price of around $110.00. This is marked in the chart below as a green color dotted line.
Daily chart – BCPC
Daily Chart – BCPC – Symmetrical Triangle Pattern Breakout
#7 Apple Inc. (NASDAQ: AAPL)
Sector: Technology | Consumer Electronics
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 AAPL is if the stock breaks out of the symmetrical triangle pattern and close above the immediate resistance level. This translates to a price of around $121.30. This is marked in the chart below as a green color dotted line.
Daily chart – AAPL
Daily Chart – AAPL – Symmetrical Triangle Pattern
#8 Columbia Property Trust, Inc. (NYSE: CXP)
Sector: Real Estate | REIT – Office
Reason: Breakout from 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): Even though the stock has broken out of a symmetrical triangle pattern, the ideal buy level for CXP is above the 200-day MA, which translates to a price of around $13.50. This is marked in the chart below as a green color dotted line.
Daily chart – CXP
Daily Chart – CXP – Symmetrical Triangle Pattern Breakout
#9 American Airlines Group Inc. (NASDAQ: AAL)
Sector: Industrials | Airlines
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 AAL is if the stock breaks out of the symmetrical triangle pattern and close above the 200-day MA, at a price of around $15.00. This is marked in the chart below as a green color dotted line.
Daily chart – AAL
Daily Chart – AAL – Symmetrical Triangle Pattern
#10 Matrix Service Company (NASDAQ: MTRX)
Sector: Energy | Oil & Gas Equipment & Services
Reason: Breakout from 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): Even though the stock has broken out of the falling wedge pattern, the ideal buy level for MTRX is above the immediate resistance level of $10.10. This is marked in the chart below as a green color dotted line.
Daily chart – MTRX
Daily Chart – MTRX – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team