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 | The New York Times Company | NYSE: NYT | $51.35 | $52.50 | Uptrend Channel |
| 2 | Chindata Group Holdings Limited | NASDAQ: CD | $19.09 | $20.00 | Bounceback from Trendline Support |
| a3 | GAN Limited | NASDAQ: GAN | $18.53 | $20.00 | Falling Wedge Pattern |
| 4 | Fly Leasing Limited | NYSE: FLY | $10.53 | $11.00 | Consolidation Area |
| 5 | VOXX International Corporation | NASDAQ: VOXX | $14.24 | $14.70 | Ascending Triangle Pattern |
| 6 | Duff & Phelps Utility and Infrastructure Fund Inc. | NYSE: DPG | $12.03 | $12.50 | Ascending Triangle Pattern |
| 7 | Sprott Physical Silver Trust | NYSE: PSLV | $9.11 | $10.00 | Falling Wedge Pattern Breakout |
| 8 | Altria Group, Inc. | NYSE: MO | $41.72 | $46.00 or $37.00 | Uptrend Channel |
| 9 | Aurinia Pharmaceuticals Inc. | NASDAQ: AUPH | $14.18 | $16.00 | Descending Triangle Pattern |
| 10 | Purple Innovation, Inc. | NASDAQ: PRPL | $34.02 | $35.20 or $32.40 | Ascending Triangle 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 The New York Times Company (NYSE: NYT)
Sector: Communication Services | Publishing
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 NYT is if the stock has a daily close above the breakout level of the uptrend channel, at around $52.50. This is marked in the chart below as a green color dotted line.
Daily chart – NYT
NYT – Uptrend Channel
#2 Chindata Group Holdings Limited (NASDAQ: CD)
Sector: Technology | Information Technology Services
Reason: Bounceback from Trendline Support
A trendline is formed when a stock’s price decreases and then rebounds at a pivot point that aligns with at least two previous support pivot points. Trendlines act as key support and resistance levels and increase the chance for the price to bounce back off them.
When the price drops to the trend line and rebounds from it during an uptrend, it usually signifies the continuation of the prevailing trend.
Buy Level(s): Although the stock has bounced higher from the trendline support, the ideal buy level for CD is above the near-term resistance area. This translates to a price of around $20.00. This is marked in the chart below as a green color dotted line.
Daily chart – CD
CD – Trendline Support
#3 GAN Limited (NASDAQ: GAN)
Sector: Consumer Cyclical | Gambling
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 GAN is if the stock breaks out of the falling wedge pattern as well as close above the immediate resistance level of $20.00. This is marked in the chart below as a green color dotted line.
Daily chart – GAN
GAN – Falling Wedge Pattern
#4 Fly Leasing Limited (NYSE: FLY)
Sector: Industrials | Rental & Leasing Services
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 FLY is if the stock has a daily close above the breakout level of the consolidation area, at around $11.00. This is marked in the chart below as a green color dotted line.
Daily chart – FLY
FLY – Consolidation Area
#5 VOXX International Corporation (NASDAQ: VOXX)
Sector: Consumer Cyclical
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 VOXX is if the stock has a daily close above the breakout level of the ascending triangle pattern and closes above the immediate resistance level, at around $14.70. This is marked in the chart below as a green color dotted line.
Daily chart – VOXX
VOXX – Ascending Triangle Pattern
#6 Duff & Phelps Utility and Infrastructure Fund Inc. (NYSE: DPG)
Sector: Financial | Closed-End Fund – Equity
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 DPG is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $12.50. This is marked in the chart below as a green color dotted line.
Daily chart – DPG
DPG- Ascending Triangle Pattern
#7 Sprott Physical Silver Trust (NYSE: PSLV)
Sector: Financial | Exchange Traded Fund
Reason: Falling Wedge Pattern Breakout
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 daily chart shows that the stock has currently broken out of a falling wedge pattern. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for PSLV is if the stock has a daily close above $10.00. This is marked in the chart below as a green color dotted line.
Daily chart – PSLV
PSLV – Falling Wedge Pattern Breakout
#8 Altria Group, Inc. (NYSE: MO)
Sector: Consumer Defensive | Tobacco
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 MO is if the stock has a daily close above the breakout level of the uptrend channel, at around $46.00; or if the stock corrects to the support level of the lower rail of the uptrend channel, at around $37.00. These buy levels are marked in the chart below as a green color dotted line.
Daily chart – MO
MO – Uptrend Channel
#9 Aurinia Pharmaceuticals Inc. (NASDAQ: AUPH)
Sector: Healthcare | Biotechnology
Reason: Formation of a Descending Triangle Pattern
A descending triangle pattern is formed by drawing a falling trendline that connects a series of lower highs and a horizontal line along a series of lows. These two lines result in the formation of a triangle. This is usually a bearish pattern. However, any upward breakout from a bearish pattern like a Descending Triangle is a strong bullish sign.
Buy Level(s): The ideal buy level for AUPH is if the stock has a daily close above the breakout level of the descending triangle pattern, at around $16.00. This is marked in the chart below as a green color dotted line.
Daily chart – AUPH
AUPH – Descending Triangle Pattern
#10 Purple Innovation, Inc. (NASDAQ: PRPL)
Sector: Consumer Cyclical | Furnishings, Fixtures & Appliances
Reason: Breakout from 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 daily chart shows that the stock has currently broken out of an ascending triangle pattern. The ideal buy level for PRPL is if the stock has a daily close above $35.20, or if it corrects to $32.40. This is marked in the chart below as a green color dotted lines.
Daily chart – PRPL
PRPL – Ascending Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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