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 | AirSculpt Technologies, Inc. | NASDAQ: AIRS | $11.20 | $11.85 | Downtrend Channel Breakout |
| 2 | CoStar Group, Inc. | NASDAQ: CSGP | $75.06 | $75.30 | Symmetrical Triangle Pattern Breakout |
| 3 | PlayAGS, Inc. | NYSE: AGS | $7.52 | $7.70 | Falling Wedge Pattern Breakout |
| 4 | Mercer International Inc. | NASDAQ: MERC | $17.29 | $17.40 | IH&S Pattern Breakout |
| 5 | Everspin Technologies, Inc. | NASDAQ: MRAM | $8.94 | $9.20 | Downtrend Channel Breakout |
| 6 | Veeco Instruments Inc. | NASDAQ: VECO | $23.24 | $23.80 | Falling Wedge Pattern Breakout |
| 7 | Jamf Holding Corp. | NASDAQ: JAMF | $27.07 | $27.90 | Symmetrical Triangle Pattern Breakout |
| 8 | Viatris Inc. | NASDAQ: VTRS | $11.13 | $11.30 | Descending Triangle Pattern Breakout |
| 9 | Madison Square Garden Sports Corp. | NYSE: MSGS | $159.61 | $160.40 | Falling Wedge Pattern |
| 10 | Mirati Therapeutics, Inc. | NASDAQ: MRTX | $86.37 | $88.80 | 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 AirSculpt Technologies, Inc. (NASDAQ: AIRS)
Sector: Healthcare | Medical Care Facilities
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 AIRS is if the stock has a daily close above $11.85. This is marked in the chart below as a green color dotted line.
Daily chart – AIRS
AIRS – Downtrend Channel Breakout
#2 CoStar Group, Inc. (NASDAQ: CSGP)
Sector: Real Estate | Real Estate Services
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 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 CSGP is if the stock closes above the immediate resistance level of $75.30. This is marked in the chart below as a green color dotted line.
Daily chart – CSGP
CSGP – Symmetrical Triangle Pattern Breakout
#3 PlayAGS, Inc. (NYSE: AGS)
Sector: Consumer Cyclical | Gambling
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 AGS is above the nearest resistance level of $7.70. This is marked in the chart below as a green color dotted line.
Daily chart – AGS
AGS – Falling Wedge Pattern Breakout
#4 Mercer International Inc. (NASDAQ: MERC)
Sector: Basic Materials | Paper & Paper Products
Reason: Breakout From an Inverted Head and Shoulders (IH&S) Pattern
An inverse head and shoulders pattern signifies the reversal of a downward trend. The pattern is formed when the price falls to a trough and then rises; then falls below the former trough and then rises again; and finally, the price falls again but not as far as the second trough and then rises again. The neckline of this pattern would be the resistance found near the top of the previous troughs. Once a breakout from this pattern occurs, it signifies a bullish trend.
Buy Level(s): The stock has currently broken out of the IH&S pattern. However, the ideal buy level for MERC is if the stock has a daily close above the price of $17.40. This is marked in the chart below as a green color dotted line.
Daily chart – MERC
MERC – IH&S Pattern Breakout
#5 Everspin Technologies, Inc. (NASDAQ: MRAM)
Sector: Technology | Semiconductors
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 MRAM is if the stock has a daily close above $9.20. This is marked in the chart below as a green color dotted line.
Daily chart – MRAM
MRAM – Downtrend Channel Breakout
#6 Veeco Instruments Inc. (NASDAQ: VECO)
Sector: Technology | Semiconductor Equipment & Materials
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 VECO is above the nearest resistance level of $23.80. This is marked in the chart below as a green color dotted line.
Daily chart – VECO
VECO – Falling Wedge Pattern Breakout
#7 Jamf Holding Corp. (NASDAQ: JAMF)
Sector: Technology | Software – Application
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 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 JAMF is if the stock closes above the immediate resistance level of $27.90. This is marked in the chart below as a green color dotted line.
Daily chart – JAMF
JAMF – Symmetrical Triangle Pattern Breakout
#8 Viatris Inc. (NASDAQ: VTRS)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
Reason: Descending Triangle Pattern Breakout
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 stock has currently broken out of the descending triangle pattern. However, the ideal buy level for VTRS is if the stock has a daily close above $11.30. This is marked in the chart below as a green color dotted line.
Daily chart – VTRS
VTRS – Descending Triangle Pattern Breakout
#9 Madison Square Garden Sports Corp. (NYSE: MSGS)
Sector: Communication Services | Entertainment
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 MSGS is if the stock breaks out of the falling wedge pattern, at a price of around $160.40. This is marked in the chart below as a green color dotted line.
Daily chart – MSGS
MSGS – Falling Wedge Pattern
#10 Mirati Therapeutics, Inc. (NASDAQ: MRTX)
Sector: Healthcare | Biotechnology
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): Although the stock has broken out of the ascending triangle pattern, the ideal buy level for MRTX is if the stock has a daily close above the near-term resistance level of $88.80. This is marked in the chart below as a green color dotted line.
Daily chart – MRTX
MRTX – Ascending Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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