The Top 10 Stocks to Watch This Week for Possible Breakouts

The screen broadened out this week.

After two weeks where the list came back heavily clustered — first software, then defensive — this week’s breakouts are spread across six sectors. Three semiconductor names (ASML, ARM, AMKR). Two financials (Schwab, Ryan Specialty). Two consumer cyclicals (Chipotle, Birkenstock). And one each from industrials (DNOW), materials (Southern Copper), and energy (Woodside).

No single sector has more than three names. That’s a different kind of list to trade. The recent weeks read like a sector bet whether you wanted one or not — this one reads like an actual diversified watchlist.

Seven of the 10 have already broken out of their primary chart patterns. Three — Schwab, Chipotle, and Southern Copper — are still inside, waiting for the trigger to fire.

Here are the 10 stocks we’re watching this week, in no particular order.

If needed, swipe or scroll sideways to view the full table.

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 Charles Schwab Corp (NYSE: SCHW)

Sector: Financial • Capital Markets

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 SCHW is if the stock breaks out of the falling wedge pattern, at a price of around $92.30. This is marked in the chart below as a green color dotted line.

Daily chart – SCHW

#2 ASML Holding NV (NASDAQ: ASML)

Sector: Technology • Semiconductor Equipment & Materials

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 ASML is if the stock has a daily close above the near-term resistance level of $1,896.00. This is marked in the chart below as a green color dotted line.

Daily chart – ASML

#3 Dnow Inc. (NYSE: DNOW)

Sector: Industrials • Industrial Distribution

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 DNOW is if the stock closes above the immediate resistance level of $14.40. This is marked in the chart below as a green color dotted line.

Daily chart – DNOW

#4 Chipotle Mexican Grill (NYSE: CMG)

Sector: Consumer Cyclical • Restaurants

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 CMG is if the stock breaks out of the falling wedge pattern, at a price of around $33.80. This is marked in the chart below as a green color dotted line.

Daily chart – CMG

#5 Arm Holdings Plc ADR (NASDAQ: ARM)

Sector: Technology • Semiconductors

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 ARM is above the near-term resistance level of $382.70. This is marked in the chart below as a green color dotted line.

Daily chart – ARM

#6 Southern Copper Corp. (NYSE: SCCO)

Sector: Basic Materials • Copper

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 SCCO is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $197.40. This is marked in the chart below as a green color dotted line.

Daily chart – SCCO

#7 Birkenstock Holding Plc. (NYSE: BIRK)

Sector: Consumer Cyclical • Footwear & Accessories

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 BIRK is if the stock has a daily close above $49.80. This is marked in the chart below as a green color dotted line.

Daily chart – BIRK

#8 Woodside Energy Group Ltd ADR (NYSE: WDS)

Sector: Energy • Oil & Gas E&P

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 WDS is above the near-term resistance level of $23.50. This is marked in the chart below as a green color dotted line.

Daily chart – WDS

#9 Ryan Specialty Holdings Inc. (NYSE: RYAN)

Sector: Financial • Insurance – Specialty

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 RYAN is if the stock has a daily close above $36.00. This is marked in the chart below as a green color dotted line.

Daily chart – RYAN

#10 AMKOR Technology Inc. (NASDAQ: AMKR)

Sector: Technology • Semiconductor Equipment & Materials

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 AMKR is above the near-term resistance level of $83.50. This is marked in the chart below as a green color dotted line.

Daily chart – AMKR

Ten names, six sectors. Three semis, two financials, two consumer cyclicals, and one each from industrials, materials, and energy. No dominant theme. After two weeks where the list was effectively a sector bet, this one isn’t.

The other thing worth noting: most of the triggers are tight — within 1-2% of current price. That makes the discipline easier to enforce, not harder. A clean daily close above the buy level listed alongside each ticker is what we’re waiting for. Not the intraday tap. Not the open. The close.

We’ll watch the table this week and let the names sort themselves out.

Happy Trading!
Tara and Greg