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 | Alkermes plc | NASDAQ: ALKS | $22.19 | $23.00 | Inverted Head and Shoulders Pattern |
| 2 | Golar LNG Limited | NASDAQ: GLNG | $11.86 | $14.20 | Ascending Triangle Pattern |
| 3 | Palo Alto Networks, Inc. | NYSE: PANW | $362.45 | $374.00 | Flag Pattern Breakout |
| 4 | Eos Energy Enterprises, Inc. | NASDAQ: EOSE | $15.17 | $15.60 | Falling Wedge Pattern Breakout |
| 5 | Advanced Emissions Solutions, Inc. | NASDAQ: ADES | $7.03 | $7.70 | Consolidation Area |
| 6 | Cyclo Therapeutics, Inc. | NASDAQ: CYTH | $8.25 | $13.00 | Symmetrical Triangle Pattern |
| 7 | Gracell Biotechnologies Inc. | NASDAQ: GRCL | $17.61 | $20.s80 | Downtrend Channel Breakout |
| 8 | PC Connection, Inc. | NASDAQ: CNXN | $48.99 | $54.00 | Ascending Triangle Pattern |
| 9 | NetScout Systems, Inc. | NASDAQ: NTCT | $27.36 | $28.00 | Falling Wedge Pattern |
| 10 | Relmada Therapeutics, Inc. | NASDAQ: RLMD | $37.91 | $39.60 | Ascending 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 Alkermes plc (NASDAQ: ALKS)
Sector: Healthcare | Biotechnology
Reason: Formation of 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 ideal buy level for ALKS is if the stock has a daily close above the breakout level of the IH&S pattern, at around $23.00. This is marked in the chart below as a green color dotted line.
Daily chart – ALKS
ALKS – Inverted Head and Shoulders Pattern
#2 Golar LNG Limited (NASDAQ: GLNG)
Sector: Energy | Oil & Gas Midstreams
Reason: Formation of 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): The ideal buy level for GLNG is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $14.20. This is marked in the chart below as a green color dotted line.
Daily chart – GLNG
GLNG- Ascending Triangle Pattern
#3 Palo Alto Networks, Inc. (NYSE: PANW)
Sector: Technology | Software – Infrastructure
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 PANW is above the near-term resistance level of $374.00. This is marked in the chart below as a green color dotted line.
Daily chart – PANW
PANW – Flag Pattern Breakout
#4 Eos Energy Enterprises, Inc. (NASDAQ: EOSE)
Sector: Industrials | Electrical Equipment & Parts
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 EOSE is above the nearest resistance level of $15.60. This is marked in the chart below as a green color dotted line.
Daily chart – EOSE
EOSE – Falling Wedge Pattern Breakout
#5 Advanced Emissions Solutions, Inc. (NASDAQ: ADES)
Sector: Industrials | Pollution & Treatment Controls
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 ADES is if the stock has a daily close above the breakout level of the consolidation area, at around $7.70. This is marked in the chart below as a green color dotted line.
Daily chart – ADES
ADES – Consolidation Area
#6 Cyclo Therapeutics, Inc. (NASDAQ: CYTH)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 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 ideal buy level for CYTH is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $13.00. This is marked in the chart below as a green color dotted line.
Daily chart – CYTH
CYTH – Symmetrical Triangle Pattern
#7 Gracell Biotechnologies Inc. (NASDAQ: GRCL)
Sector: Healthcare | Biotechnology
Reason: Downtrend Channel Pattern 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.
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): 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 GRCL is if the stock has a daily close above $20.80. This is marked in the chart below as a green color dotted line.
Daily chart – GRCL
GRCL – Downtrend Channel Breakout
#8 PC Connection, Inc. (NASDAQ: CNXN)
Sector: Technology | Electronics & Computer Distribution
Reason: Formation of 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): The ideal buy level for CNXN is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $54.00. This is marked in the chart below as a green color dotted line.
Daily chart – CNXN
CNXN – Ascending Triangle Pattern
#9 NetScout Systems, Inc. (NASDAQ: NTCT)
Sector: Technology | Software – Infrastructure
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 NTCT is if the stock breaks out of the falling wedge pattern, at a price of around $28.00. This is marked in the chart below as a green color dotted line.
Daily chart – NTCT
NTCT- Falling Wedge Pattern
#10 Relmada Therapeutics, Inc. (NASDAQ: RLMD)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
Reason: Formation of 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): The ideal buy level for RLMD is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $39.60. This is marked in the chart below as a green color dotted line.
Daily chart – RLMD
RLMD – Ascending Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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