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 | Herbalife Ltd | NYSE: HLF | $11.99 | $12.20 | Symmetrical Triangle Pattern Breakout |
| 2 | Alphabet Inc. | NASDAQ: GOOGL | $299.66 | $306.00 | Uptrend Channel |
| 3 | Magnera Corp. | NYSE: MAGN | $11.54 | $12.00 | Falling Wedge Pattern Breakout |
| 4 | Lennar Corp | NYSE: LEN | $123.16 | $126.40 | Symmetrical Triangle Pattern |
| 5 | Paccar Inc. | NASDAQ: PCAR | $102.99 | $103.60 | Consolidation Area |
| 6 | Hormel Foods Corp | NYSE: HRL | $22.69 | $23.70 | Downtrend Channel |
| 7 | GE HealthCare Technologies Inc. | NASDAQ: GEHC | $76.45 | $80.00 | Symmetrical Triangle Pattern |
| 8 | Kymera Therapeutics Inc. | NASDAQ: KYMR | $66.04 | $68.00 | Uptrend Channel |
| 9 | Ball Corp | NYSE: BALL | $49.87 | $50.70 | Falling Wedge Pattern Breakout |
| 10 | Gen Digital Inc. | NASDAQ: GEN | $26.54 | $27.00 | Symmetrical 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 Herbalife Ltd (NYSE: HLF)
Sector: Consumer Defensive • Packaged Foods
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 HLF is if the stock closes above the immediate resistance level of $12.20. This is marked in the chart below as a green color dotted line.
Daily chart – HLF
HLF – Symmetrical Triangle Pattern Breakout
#2 Alphabet Inc. (NASDAQ: GOOGL)
Sector: Communication Services • Internet Content & Information
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 GOOGL is if the stock breaks out of the uptrend channel and has a daily close above $306.00. This is marked in the chart below as a green color dotted line.
Daily chart – GOOGL
GOOGL – Uptrend Channel
#3 Magnera Corp. (NYSE: MAGN)
Sector: Basic Materials • Paper & Paper Products
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 MAGN is above the nearest resistance level of $12.00. This is marked in the chart below as a green color dotted line.
Daily chart – MAGN
MAGN – Falling Wedge Pattern Breakout
#4 Lennar Corp (NYSE: LEN)
Sector: Consumer Cyclical • Residential Construction
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 LEN is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $126.40. This is marked in the chart below as a green color dotted line.
Daily chart – LEN
LEN – Symmetrical Triangle Pattern
#5 Paccar Inc. (NASDAQ: PCAR)
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 PCAR is above the breakout level of the consolidation area, at around $103.60. This is marked in the chart below as a green color dotted line.
Daily chart – PCAR
PCAR – Consolidation Area
#6 Hormel Foods Corp (NYSE: HRL)
Sector: Consumer Defensive • Packaged Foods
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 a good bullish indication.
Buy Level(s): The daily chart shows that the stock is currently forming a downtrend channel. The ideal buy level for HRL is if the stock breaks out of the downtrend channel and has a daily close above $23.70. This is marked in the chart below as a green color dotted line.
Daily chart – HRL
HRL – Downtrend Channel
#7 GE HealthCare Technologies Inc. (NASDAQ: GEHC)
Sector: Healthcare • Medical Devices
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 GEHC is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $80.00. This is marked in the chart below as a green color dotted line.
Daily chart – GEHC
GEHC – Symmetrical Triangle Pattern
#8 Kymera Therapeutics Inc. (NASDAQ: KYMR)
Sector: Healthcare • Biotechnology
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 KYMR is if the stock breaks out of the uptrend channel and has a daily close above $68.00. This is marked in the chart below as a green color dotted line.
Daily chart – KYMR
KYMR – Uptrend Channel
#9 Ball Corp (NYSE: BALL)
Sector: Consumer Cyclical • Packaging & Containers
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 BALL is above the nearest resistance level of $50.70. This is marked in the chart below as a green color dotted line.
Daily chart – BALL
BALL – Falling Wedge Pattern Breakout
#10 Gen Digital Inc. (NASDAQ: GEN)
Sector: Technology • Software – Infrastructure
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 GEN is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $27.00. This is marked in the chart below as a green color dotted line.
Daily chart – GEN
GEN – Symmetrical Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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