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 | Cerner Corporation | NASDAQ: CERN | $74.51 | $76.50 | Ascending Triangle Pattern |
| 2 | Inseego Corp. | NASDAQ: INSG | $13.76 | $15.20 | Downtrend Channel |
| 3 | Oshkosh Corporation | NYSE: OSK | $86.38 | $87.50 | Ascending Triangle Pattern |
| 4 | Johnson Outdoors Inc. | NASDAQ: JOUT | $95.77 | $96.80 | Uptrend Channel |
| 5 | Molecular Templates, Inc. | NASDAQ: MTEM | $9.96 | $12.80, $11.00 | Falling Wedge Pattern Breakout |
| 6 | Sterling Construction Company, Inc. | NASDAQ: STRL | $16.57 | $17.20 | Ascending Triangle Pattern |
| 7 | Ardelyx, Inc. | NASDAQ: ARDX | $6.68 | $7.50 | Downtrend Channel Breakout |
| 8 | Donegal Group Inc. | NASDAQ: DGICA | $14.10 | $15.30 | Ascending Triangle Pattern |
| 9 | SCYNEXIS, Inc. | NASDAQ: SCYX | $7.87 | $10.30 | Downtrend Channel Breakout |
| 10 | ChromaDex Corporation | NASDAQ: CDXC | $5.50 | $6.00 | 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 Cerner Corporation (NASDAQ: CERN)
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 CERN is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $76.50. This is marked in the chart below as a green color dotted line.
Daily chart – CERN
CERN- Ascending Triangle Pattern
#2 Inseego Corp. (NASDAQ: INSG)
Sector: Technology | Communication Equipment
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 INSG is if the stock has a daily close above the breakout level of the downtrend channel, at around $15.20. This is marked in the chart below as a green color dotted line.
Daily chart – INSG
INSG – Channel
#3 Oshkosh Corporation (NYSE: OSK)
Sector: Industrials | Farm & Heavy Construction Machinery
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 OSK is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $87.50. This is marked in the chart below as a green color dotted line.
Daily chart – OSK
OSK – Ascending Triangle Pattern
#4 Johnson Outdoors Inc. (NASDAQ: JOUT)
Sector: Consumer Cyclical | Leisure
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 JOUT is if the stock has a daily close above the breakout level of the uptrend channel, at around $96.80. This is marked in the chart below as a green color dotted line.
Daily chart – JOUT
JOUT – Uptrend Channel
#5 Molecular Templates, Inc. (NASDAQ: MTEM)
Sector: Healthcare | Biotechnology
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 MTEM is if the stock has a daily close above the 200-day SAM, at around $12.80. However, those with a higher risk appetite can enter near $11.00. These levels are marked in the chart below as a green and orange color dotted line.
Daily chart – MTEM
MTEM – Falling Wedge Pattern Breakout
#6 Sterling Construction Company, Inc. (NASDAQ: STRL)
Sector: Industrials | Engineering & Construction
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 STRL is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $17.20. This is marked in the chart below as a green color dotted line.
Daily chart – STRL
STRL – Ascending Triangle Pattern
#7 Ardelyx, Inc. (NASDAQ: ARDX)
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 a good bullish indication.
Buy Level(s): Although the stock has broken out of the downtrend channel, the ideal buy level for ARDX is above the price of $7.50. This is marked in the chart below as a green color dotted line.
Daily chart – ARDX
ARDX – Downtrend Channel Breakout
#8 Donegal Group Inc. (NASDAQ: DGICA)
Sector: Financial | Insurance – Property & Casualty
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 DGICA is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $15.30. This is marked in the chart below as a green color dotted line.
Daily chart – DGICA
DGICA – Ascending Triangle Pattern
#9 SCYNEXIS, Inc. (NASDAQ: SCYX)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 broken out of the downtrend channel, the ideal buy level for SCYX is above the price of $10.30. This is marked in the chart below as a green color dotted line.
Daily chart – SCYX
SCYX – Downtrend Channel Breakout
#10 ChromaDex Corporation (NASDAQ: CDXC)
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 CDXC is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $6.00. This is marked in the chart below as a green color dotted line.
Daily chart – CDXC
CDXC – Ascending Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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