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 | J.B. Hunt Transport Services, Inc. | NASDAQ: JBHT | $203.85 | $212.40 | Uptrend Channel |
| 2 | Deere & Company | NYSE: DE | $390.07 | $400.00 | Consolidation Area |
| 3 | Callon Petroleum Company | NYSE: CPE | $59.79 | $66.40 | Symmetrical Triangle Pattern Breakout |
| 4 | D.R. Horton, Inc. | NYSE: DHI | $85.40 | $90.10 | Falling Wedge Pattern Breakout |
| 5 | EQT Corporation | NYSE: EQT | $26.36 | $27.00 | Uptrend Channel Breakout |
| 6 | Abbott Laboratories | NYSE: ABT | $121.41 | $124.60 | Falling Wedge Pattern |
| 7 | W&T Offshore, Inc. | NYSE: WTI | $5.78 | $5.90 | Symmetrical Triangle Pattern Breakout |
| 8 | Sunnova Energy International Inc. | NYSE: NOVA | $18.57 | $21.00 | Falling Wedge Pattern Breakout |
| 9 | Ferroglobe PLC | NASDAQ: GSM | $9.36 | $10.00 | Downtrend Channel Breakout |
| 10 | Oak Street Health, Inc. | NYSE: OSH | $22.21 | $25.00 | Downtrend Channel |
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 J.B. Hunt Transport Services, Inc. (NASDAQ: JBHT)
Sector: Industrials | Integrated Freight & Logistics
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 JBHT is if the stock breaks out of the uptrend channel and has a daily close above $212.40. This is marked in the chart below as a green color dotted line.
Daily chart – JBHT
JBHT – Uptrend Channel
#2 Deere & Company (NYSE: DE)
Sector: Industrials | Farm & Heavy Construction Machinery
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 DE is above the breakout level of the consolidation area, at around $400. This is marked in the chart below as a green color dotted line.
Daily chart – DE
DE – Consolidation Area
#3 Callon Petroleum Company (NYSE: CPE)
Sector: Energy | Oil & Gas E&P
Reason: Symmetrical Triangle Pattern Breakout
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 stock has currently broken out of a symmetrical triangle pattern. However, the ideal buy level for CPE is if the stock closes above the immediate resistance level of $66.40. This is marked in the chart below as a green color dotted line.
Daily chart – CPE
CPE – Symmetrical Triangle Pattern Breakout
#4 D.R. Horton, Inc. (NYSE: DHI)
Sector: Consumer Cyclical | Residential Construction
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 stock has currently broken out of a falling wedge pattern. However, the ideal buy level for DHI is above the nearest resistance level of $90.10. This is marked in the chart below as a green color dotted line.
Daily chart – DHI
DHI – Falling Wedge Pattern Breakout
#5 EQT Corporation (NYSE: EQT)
Sector: Energy | Oil & Gas E&P
Reason: Breakout From 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 stock has currently broken out of the uptrend channel. However, the ideal buy level for EQT is if the stock has a daily close above the near-term resistance level of $27.00. This is marked in the chart below as a green color dotted line.
Daily chart – EQT
EQT – Uptrend Channel Breakout
#6 Abbott Laboratories (NYSE: ABT)
Sector: Healthcare | Medical Devices
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 ABT is if the stock breaks out of the falling wedge pattern, at a price of around $124.60. This is marked in the chart below as a green color dotted line.
Daily chart – ABT
ABT – Falling Wedge Pattern
#7 W&T Offshore, Inc. (NYSE: WTI)
Sector: Energy | Oil & Gas E&P
Reason: Symmetrical Triangle Pattern Breakout
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 stock has currently broken out of a symmetrical triangle pattern. However, the ideal buy level for WTI is if the stock closes above the immediate resistance level of $5.90. This is marked in the chart below as a green color dotted line.
Daily chart – WTI
WTI – Symmetrical Triangle Pattern Breakout
#8 Sunnova Energy International Inc. (NYSE: NOVA)
Sector: Technology | Solar
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 stock has currently broken out of a falling wedge pattern. However, the ideal buy level for NOVA is above the nearest resistance level of $21.00. This is marked in the chart below as a green color dotted line.
Daily chart – NOVA
NOVA – Falling Wedge Pattern Breakout
#9 Ferroglobe PLC (NASDAQ: GSM)
Sector: Basic Materials | Other Industrial Metals & Mining
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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for GSM is above the near-term resistance area, which translates to a price of around $10.00. This is marked in the chart below as a green color dotted line.
Daily chart – GSM
GSM – Downtrend Channel Breakout
#10 Oak Street Health, Inc. (NYSE: OSH)
Sector: Healthcare | Medical Care Facilities
Reason: Downtrend Channel Pattern
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 OSH is if the stock breaks out of the downtrend channel and closes above the price of $25.00. This is marked in the chart below as a green color dotted line.
Daily chart – OSH
OSH – Downtrend Channel
Happy Trading!
Trades of The Day Research Team
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