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 | 3D Systems Corporation | NYSE: DDD | $9.28 | $9.65 | Downtrend Channel Breakout |
| 2 | Macy’s, Inc. | NYSE: M | $15.42 | $15.90 | Falling Wedge Pattern Breakout |
| 3 | JetBlue Airways Corporation | NASDAQ: JBLU | $7.18 | $7.30 | Consolidation Area |
| 4 | KE Holdings Inc. | NYSE: BEKE | $16.11 | $17.10 | Symmetrical Triangle Pattern |
| 5 | 3M Company | NYSE: MMM | $102.53 | $104.00 | Downtrend Channel Breakout |
| 6 | The Boeing Company | NYSE: BA | $213.32 | $215.40 | Flag Pattern Breakout |
| 7 | Samsara Inc. | NYSE: IOT | $24.31 | $24.90 | Breakout From Consolidation Area |
| 8 | The Scotts Miracle-Gro Company | NYSE: SMG | $66.74 | $69.80 | Symmetrical Triangle Pattern |
| 9 | DISH Network Corporation | NASDAQ: DISH | $7.30 | $7.55 | Falling Wedge Pattern Breakout |
| 10 | Frontier Group Holdings, Inc. | NASDAQ: ULCC | $9.14 | $9.40 | Downtrend Channel 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 3D Systems Corporation (NYSE: DDD)
Sector: Technology | Computer Hardware
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 DDD is if the stock has a daily close above $9.65. This is marked in the chart below as a green color dotted line.
Daily chart – DDD
DDD – Downtrend Channel Breakout
#2 Macy’s, Inc. (NYSE: M)
Sector: Consumer Cyclical | Department Stores
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 M is above the nearest resistance level of $15.90. This is marked in the chart below as a green color dotted line.
Daily chart – M
M – Falling Wedge Pattern Breakout
#3 JetBlue Airways Corporation (NASDAQ: JBLU)
Sector: Industrials | Airlines
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 JBLU is above the breakout level of the consolidation area, at around $7.30. This is marked in the chart below as a green color dotted line.
Daily chart – JBLU
JBLU – Consolidation Area
#4 KE Holdings Inc. (NYSE: BEKE)
Sector: Real Estate | Real Estate Services
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 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 BEKE is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $17.10. This is marked in the chart below as a green color dotted line.
Daily chart – BEKE
BEKE – Symmetrical Triangle Pattern
#5 3M Company (NYSE: MMM)
Sector: Industrials | Conglomerates
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 MMM is if the stock has a daily close above $104.00. This is marked in the chart below as a green color dotted line.
Daily chart – MMM
MMM – Downtrend Channel Breakout
#6 The Boeing Company (NYSE: BA)
Sector: Industrials | Aerospace & Defense
Reason: Breakout From a Flag Pattern
A flag pattern is a short-term continuation pattern that marks a small consolidation before the previous move resumes. The pattern is formed when the market consolidates in a narrow range after a sharp move. For a stock in an uptrend, a breakout from this pattern is typically a strong bullish indication.
Buy Level(s): Although the stock has currently broken out of the flag pattern, the ideal buy level for BA is above the near-term resistance level of $215.40. This is marked in the chart below as a green color dotted line.
Daily chart – BA
BA – Flag Pattern Breakout
#7 Samsara Inc. (NYSE: IOT)
Sector: Technology | Software – Infrastructure
Reason: Breakout From 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): Although the stock has currently broken out of a consolidation area, the ideal buy level for IOT is above the near-term resistance area, which translates to a price of around $24.90. This is marked in the chart below as a green color dotted line.
Daily chart – IOT
IOT – Breakout From Consolidation Area
#8 The Scotts Miracle-Gro Company (NYSE: SMG)
Sector: Basic Materials | Agricultural Inputs
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 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 SMG is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $69.80. This is marked in the chart below as a green color dotted line.
Daily chart – SMG
SMG – Symmetrical Triangle Pattern
#9 DISH Network Corporation (NASDAQ: DISH)
Sector: Communication Services | Telecom Services
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 DISH is above the nearest resistance level of $7.55. This is marked in the chart below as a green color dotted line.
Daily chart – DISH
DISH – Falling Wedge Pattern Breakout
#10 Frontier Group Holdings, Inc. (NASDAQ: ULCC)
Sector: Industrials | Airlines
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 ULCC is if the stock has a daily close above $9.40. This is marked in the chart below as a green color dotted line.
Daily chart – ULCC
ULCC – Downtrend Channel Breakout
Happy Trading!
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