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 | Omega Healthcare Investors, Inc. | NYSE: OHI | $37.59 | $39.30 | Ascending Triangle Pattern |
| 2 | iHeartMedia, Inc. | NASDAQ: IHRT | $18.21 | $18.60 | Symmetrical Triangle Pattern |
| 3 | PVH Corp. | NYSE: PVH | $110.50 | $111.00 | Ascending Triangle Pattern |
| 4 | SailPoint Technologies Holdings, Inc. | NYSE: SAIL | $48.47 | $54.50 | Falling Wedge Pattern |
| 5 | Broadmark Realty Capital Inc. | NYSE: BRMK | $10.66 | $10.80 | Double Bottom Pattern |
| 6 | Zuora, Inc. | NYSE: ZUO | $16.42 | $17.30 | Ascending Triangle Pattern |
| 7 | Bright Horizons Family Solutions Inc. | NYSE: BFAM | $164.79 | $182.80 | Consolidation Area |
| 8 | GCP Applied Technologies Inc. | NYSE: GCP | $25.40 | $27.90 | Ascending Triangle Pattern |
| 9 | Porch Group Inc. | NASDAQ: PRCH | $16.80 | $18.60 | Falling Wedge Pattern |
| 10 | Crinetics Pharmaceuticals, Inc. | NASDAQ: CRNX | $17.07 | $19.00 | 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 Omega Healthcare Investors, Inc. (NYSE: OHI)
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 OHI is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $39.30. This is marked in the chart below as a green color dotted line.
Daily chart – OHI
OHI – Ascending Triangle Pattern
#2 iHeartMedia, Inc. (NASDAQ: IHRT)
Sector: Communication Services | Broadcasting
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 IHRT is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $18.60. This is marked in the chart below as a green color dotted line.
Daily chart – IHRT
IHRT – Symmetrical Triangle Pattern
#3 PVH Corp. (NYSE: PVH)
Sector: Consumer Cyclical | Apparel Manufacturing
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 PVH is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $111.00. This is marked in the chart below as a green color dotted line.
Daily chart – PVH
PVH – Ascending Triangle Pattern
#4 SailPoint Technologies Holdings, Inc. (NYSE: SAIL)
Sector: Technology | Software – Infrastructure
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 SAIL is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $54.50. This is marked in the chart below as a green color dotted line.
Daily chart – SAIL
SAIL – Falling Wedge Pattern
#5 Broadmark Realty Capital Inc. (NYSE: BRMK)
Sector: Real Estate | REIT – Mortgage
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 levels 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 BRMK is above the neckline of the double bottom pattern, at around $10.80. This is marked in the chart below as a green color dotted line.
Daily chart – BRMK
BRMK – Double Bottom Pattern
#6 Zuora, Inc. (NYSE: ZUO)
Sector: Technology | Software – Infrastructure
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 ZUO is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $17.30. This is marked in the chart below as a green color dotted line.
Daily chart – ZUO
ZUO – Ascending Triangle Pattern
#7 Bright Horizons Family Solutions Inc. (NYSE: BFAM)
Sector: Consumer Cyclical | Personal 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 BFAM is if the stock has a daily close above the breakout level of the consolidation area, at around $182.80. This is marked in the chart below as a green color dotted line.
Daily chart – BFAM
BFAM – Consolidation Area
#8 GCP Applied Technologies Inc. (NYSE: GCP)
Sector: Basic Materials | Specialty Chemicals
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 GCP is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $27.90. This is marked in the chart below as a green color dotted line.
Daily chart – GCP
GCP – Ascending Triangle Pattern
#9 Porch Group Inc. (NASDAQ: PRCH)
Sector: Technology | Software – Application
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 PRCH is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $18.60. This is marked in the chart below as a green color dotted line.
Daily chart – PRCH
PRCH – Falling Wedge Pattern
#10 Crinetics Pharmaceuticals, Inc. (NASDAQ: CRNX)
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 CRNX is if the stock breaks out of the ascending triangle pattern and closes above the near-term resistance level of around $19.00. This is marked in the chart below as a green color dotted line.
Daily chart – CRNX
CRNX – Ascending Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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