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 | nLIGHT, Inc. | NASDAQ: LASR | $40.74 | $41.00 | Uptrend Channel |
| 2 | PBF Energy Inc. | NYSE: PBF | $10.55 | $11.50 | Symmetrical Triangle Pattern |
| 3 | Danaher Corporation | NYSE: DHR | $245.95 | $249.00 | Ascending Triangle Pattern |
| 4 | Flexion Therapeutics, Inc. | NASDAQ: FLXN | $11.68 | $13.50 | Symmetrical Triangle Pattern |
| 5 | Leggett & Platt, Incorporated | NYSE: LEG | $42.35 | $46.00 | Ascending Triangle Pattern |
| 6 | Baxter International Inc. | NYSE: BAX | $78.73 | $83.30 | Downtrend Channel |
| 7 | Commercial Metals Company | NYSE: CMC | $22.22 | $24.00 | Consolidation Area |
| 8 | Marvell Technology Group Ltd. | NASDAQ: MRVL | $53.82 | $56.00 | Uptrend Channel |
| 9 | PPD, Inc. | NASDAQ: PPD | $38.00 | $38.10 | Trend Channel |
| 10 | Lordstown Motors Corp. | NASDAQ: RIDE | $26.91 | $32.00 | 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 nLIGHT, Inc. (NASDAQ: LASR)
Sector: Technology | Semiconductors
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 LASR is if the stock has a daily close above the breakout level of the uptrend channel, at around $41.00. This is marked in the chart below as a green color dotted line.
Daily chart – LASR
LASR – Uptrend Channel
#2 PBF Energy Inc. (NYSE: PBF)
Sector: Energy | Oil & Gas Refining & Marketing
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 PBF is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $11.50. This is marked in the chart below as a green color dotted line.
Daily chart – PBF
PBF – Symmetrical Triangle Pattern
#3 Danaher Corporation (NYSE: DHR)
Sector: Healthcare | Diagnostics & Research
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 DHR is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $249.00. This is marked in the chart below as a green color dotted line.
Daily chart – DHR
DHR – Ascending Triangle Pattern
#4 Flexion Therapeutics, Inc. (NASDAQ: FLXN)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 FLXN is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $13.50. This is marked in the chart below as a green color dotted line.
Daily chart – FLXN
FLXN – Symmetrical Triangle Pattern
#5 Leggett & Platt, Incorporated (NYSE: LEG)
Sector: Consumer Cyclical | Furnishings, Fixtures & Appliances
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 LEG is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $46.00. This is marked in the chart below as a green color dotted line.
Daily chart – LEG
LEG – Ascending Triangle Pattern
#6 Baxter International Inc. (NYSE: BAX)
Sector: Healthcare | Medical Instruments & Supplies
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 as a good bullish indication.
Buy Level(s): The ideal buy level for BAX is if the stock has a daily close above the breakout level of the downtrend channel, at around $83.30. This is marked in the chart below as a green color dotted line.
Daily chart – BAX
BAX – Downtrend Channel
#7 Commercial Metals Company (NYSE: CMC)
Sector: Basic Materials | Steel
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 CMC is if the stock has a daily close above the breakout level of the consolidation area, at around $24.00. This is marked in the chart below as a green color dotted line.
Daily chart – CMC
CMC – Consolidation Area
#8 Marvell Technology Group Ltd. (NASDAQ: MRVL)
Sector: Technology | Semiconductors
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 MRVL is if the stock has a daily close above the breakout level of the uptrend channel, at around $56.00. This is marked in the chart below as a green color dotted line.
Daily chart – MRVL
MRVL – Uptrend Channel
#9 PPD, Inc. (NASDAQ: PPD)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
Reason: Formation of a Trend Channel
A trend channel is the price action contained between 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 channel before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for PPD is if the stock has a daily close above the breakout level of the trend channel, at around $38.10. This is marked in the chart below as a green color dotted line.
Daily chart – PPD
PPD – Trend Channel
#10 Lordstown Motors Corp. (NASDAQ: RIDE)
Sector: Consumer Cyclical | Auto Manufacturers
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 RIDE is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $32.00. This is marked in the chart below as a green color dotted line.
Daily chart – RIDE
RIDE – Ascending Triangle Pattern
Happy Trading!
— Trades of The Day Research Team