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 | Health Catalyst, Inc. | NASDAQ: HCAT | $36.90 | $37.20 | Ascending Triangle Pattern |
| 2 | Capitala Finance Corp. | NASDAQ: CPTA | $14.55 | $16.20 | Proximity to 200-day SMA |
| 3 | American Realty Investors, Inc. | NYSE: ARL | $9.93 | $11.00 | Ascending Triangle Pattern |
| 4 | Genco Shipping & Trading Limited | NYSE: GNK | $7.93 | $8.00 | Double Bottom Pattern Breakout, Uptrend Channel |
| 5 | GoHealth, Inc. | NASDAQ: GOCO | $11.87 | $13.00 | Double Bottom Pattern, Downtrend Channel |
| 6 | Legend Biotech Corporation | NASDAQ: LEGN | $32.39 | $34.00 | Downtrend Channel Breakout |
| 7 | The AZEK Company Inc. | NYSE: AZEK | $34.27 | $37.00 | Symmetrical Triangle Pattern |
| 8 | Aqua America, Inc. | NYSE: WTRU | $61.00 | $62.50 | Ascending Triangle Pattern |
| 9 | HOOKIPA Pharma Inc. | NASDAQ: HOOK | $11.27 | $12.40 | Ascending Triangle Pattern |
| 10 | The Boeing Company | NYSE: BA | $232.71 | $238.00 | 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 Health Catalyst, Inc. (NASDAQ: HCAT)
Sector: Healthcare | Health Information Services
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 HCAT is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $37.20. This is marked in the chart below as a green color dotted line.
Daily chart – HCAT
HCAT – Ascending Triangle Pattern
#2 Capitala Finance Corp. (NASDAQ: CPTA)
Sector: Financial | Asset Management
Reason: Proximity to 200-day SMA
A moving average (MA) is a widely used technical indicator that smooths out price trends by filtering out the price data from short-term price fluctuations. Once the price of a stock crosses above a moving average, the trend is considered to be up.
Buy Level(s): The ideal buy level for CPTA is if the stock has a daily close above the 200-day SMA, at around $16.20. This is marked in the chart below as a green color dotted line.
Daily chart – CPTA
CPTA – Near Moving Average
#3 American Realty Investors, Inc. (NYSE: ARL)
Sector: Real Estate | Real Estate – Development
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 ARL 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 – ARL
ARL- Ascending Triangle Pattern
#4 Genco Shipping & Trading Limited (NYSE: GNK)
Sector: Industrials | Marine Shipping
Reason: Breakout from a Double Bottom Pattern, Formation of an Uptrend 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 as neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
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 GNK is if the stock has a daily close above the breakout level of the uptrend channel, at around $8.00. This is marked in the chart below as a green color dotted line.
Daily chart – GNK
GNK- Double Bottom Pattern, Uptrend Channel
#5 GoHealth, Inc. (NASDAQ: GOCO)
Sector: Financial | Insurance Brokers
Reason: Formation of a Double Bottom Pattern, Formation of a 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 as neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
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 good bullish indication.
Buy Level(s): The ideal buy level for GOCO is if the stock has a daily close above the breakout level of the downtrend channel, at around $13.00. This is marked in the chart below as a green color dotted line.
Daily chart – GOCO
GOKO- Double Bottom Pattern, Downtrend Channel
#6 Legend Biotech Corporation (NASDAQ: LEGN)
Sector: Healthcare | Biotechnology
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 as good bullish indication.
Buy Level(s): Although LEGN has currently broken out of a downtrend channel, the ideal buy level for the stock is above the nearest resistance level of $34.00. This is marked in the chart below as a green color dotted line.
Daily chart – LEGN
#7 The AZEK Company Inc. (NYSE: AZEK)
Sector: Industrials | Building Products & Equipment
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 AZEK is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $37.00. This is marked in the chart below as a green color dotted line.
Daily chart – AZEK
AZEK – Symmetrical Triangle Pattern
#8 Aqua America, Inc. (NYSE: WTRU)
Sector: Utilities | Utilities – Regulated Water
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 WTRU is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $62.50. This is marked in the chart below as a green color dotted line.
Daily chart – WTRU
WTRU – Ascending Triangle Pattern
#9 HOOKIPA Pharma Inc. (NASDAQ: HOOK)
Sector: Healthcare | Biotechnology
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 HOOK is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $12.40. This is marked in the chart below as a green color dotted line.
Daily chart – HOOK
HOOK – Ascending Triangle Pattern
#10 The Boeing Company (NYSE: BA)
Sector: Industrials | Aerospace & Defense
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 BA is above the breakout level of the Uptrend Channel. This translates to a price of around $238.00. This is marked in the chart below as a green color dotted line.
Daily chart – BA
BA- Uptrend Channel
Happy Trading!
Trades of The Day Research Team