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 | Karyopharm Therapeutics Inc. | NASDAQ: KPTI | $16.47 | $17.50 | Falling Wedge Pattern |
| 2 | Humanigen, Inc. | NASDAQ: HGEN | $15.50 | $17.80 | Double Bottom Pattern |
| 3 | Fortinet, Inc. | NASDAQ: FTNT | $145.85 | $150.00 | Downtrend Channel Breakout |
| 4 | The Allstate Corporation | NYSE: ALL | $107.40 | $109.50 | Consolidation Area |
| 5 | Physicians Realty Trust | NYSE: DOC | $17.97 | $19.00 | Ascending Triangle Pattern |
| 6 | CNX Resources Corporation | NYSE: CNX | $11.11 | $12.00 | Symmetrical Triangle Pattern |
| 7 | The Hartford Financial Services Group, Inc. | NYSE: HIG | $47.65 | $48.00 | Ascending Triangle Pattern |
| 8 | Gilead Sciences, Inc. | NASDAQ: GILD | $59.08 | $62.00 | Falling Wedge Pattern |
| 9 | Edwards Lifesciences Corporation | NYSE: EW | $86.82 | $88.00 | Ascending Triangle Pattern |
| 10 | NortonLifeLock Inc. | NASDAQ: NLOK | $21.24 | $22.20 | Downtrend Channel 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 Karyopharm Therapeutics Inc. (NASDAQ: KPTI)
Sector: Healthcare | Biotechnology
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 KPTI is if the stock breaks out of the falling wedge pattern as well as close above the 200-day SMA, which translates to a price of $17.50. This is marked in the chart below as a green color dotted line.
Daily chart – KPTI
KPTI – Falling Wedge Pattern
#2 Humanigen, Inc. (NASDAQ: HGEN)
Sector: Healthcare | Biotechnology
Reason: Formation of a Double Bottom Pattern
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 the neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
Buy Level(s): The ideal buy level for HGEN is above the neckline of the double bottom pattern, at around $17.80. This is marked in the chart below as a green color dotted line.
Daily chart – HGEN
HGEN – Double Bottom Pattern
#3 Fortinet, Inc. (NASDAQ: FTNT)
Sector: Technology | Software – Infrastructure
Reason: Downtrend Channel Breakout
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 daily chart shows that the stock has currently broken out of a downtrend channel. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for FTNT is if the stock has a daily close above the $150.00. This is marked in the chart below as a green color dotted line.
Daily chart – FTNT
FTNT – Downtrend Channel Breakout
#4 The Allstate Corporation (NYSE: ALL)
Sector: Financial | Insurance – Property & Casualty
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 ALL is if the stock has a daily close above the breakout level of the consolidation area, at around $109.50. This is marked in the chart below as a green color dotted line.
Daily chart – ALL
ALL – Consolidation Area
#5 Physicians Realty Trust (NYSE: DOC)
Sector: Real Estate | REIT – Healthcare Facilities
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 DOC is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $19.00. This is marked in the chart below as a green color dotted line.
Daily chart – DOC
DOC – Ascending Triangle Pattern
#6 CNX Resources Corporation (NYSE: CNX)
Sector: Energy | Oil & Gas E&P
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 CNX is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $12.00. This is marked in the chart below as a green color dotted line.
Daily chart – CNX
CNX – Symmetrical Triangle Pattern
#7 The Hartford Financial Services Group, Inc. (NYSE: HIG)
Sector: Financial | Insurance – Diversified
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 HIG is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $48.00. This is marked in the chart below as a green color dotted line.
Daily chart – HIG
HIG – Ascending Triangle Pattern
#8 Gilead Sciences, Inc. (NASDAQ: GILD)
Sector: Healthcare | Drug Manufacturers – General
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 GILD is if the stock breaks out of the falling wedge pattern as well as close above the immediate resistance level of $62.00. This is marked in the chart below as a green color dotted line.
Daily chart – GILD
GILD – Falling Wedge Pattern
#9 Edwards Lifesciences Corporation (NYSE: EW)
Sector: Healthcare | Medical Devices
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 EW is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $88.00. This is marked in the chart below as a green color dotted line.
Daily chart – EW
EW – Ascending Triangle Pattern
#10 NortonLifeLock Inc. ( NASDAQ: NLOK)
Sector: Technology | Software – Infrastructure
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): The daily chart shows that the stock has currently broken out of a downtrend channel. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for NLOK is if the stock has a daily close above $22.20. This is marked in the chart below as a green color dotted line.
Daily chart – NLOK
NLOK – Downtrend Channel Breakout
Happy Trading!
Trades of The Day Research Team
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