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 | CalAmp Corp. | NASDAQ: CAMP | $12.64 | $14.60 | Ascending Triangle Pattern |
| 2 | Freshpet, Inc. | NASDAQ: FRPT | $170.06 | $172.50 | Uptrend Channel |
| 3 | Open Lending Corporation | NASDAQ: LPRO | $42.44 | $43.50 | Consolidation Area |
| 4 | IAC/InterActiveCorp | NASDAQ: IAC | $152.46 | $176.70 | Flag Pattern |
| 5 | Pioneer Natural Resources Company | NYSE: PXD | $165.17 | $173.00 | Ascending Triangle Pattern |
| 6 | Merck & Co., Inc. | NYSE: MRK | $77.20 | $78.00 | Symmetrical Triangle Pattern |
| 7 | Natera, Inc. | NASDAQ: NTRA | $115.15 | $125.00 | Consolidation Area |
| 8 | Horizon Therapeutics Public Limited Company | NASDAQ: HZNP | $95.92 | $97.20 | Ascending Triangle Pattern |
| 9 | Evolent Health, Inc. | NYSE: EVH | $21.47 | $22.00 | Consolidation Area |
| 10 | Arcus Biosciences, Inc. | NYSE: RCUS | $28.83 | $32.00 | Downtrend Channel |
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 CalAmp Corp. (NASDAQ: CAMP)
Sector: Technology | Communication Equipment
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 CAMP is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $14.60. This is marked in the chart below as a green color dotted line.
Daily chart – CAMP
CAMP – Ascending Triangle Pattern
#2 Freshpet, Inc. (NASDAQ: FRPT)
Sector: Consumer Defensive | Packaged Foods
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 FRPT is if the stock has a daily close above the near-term resistance level of $172.50 within the uptrend channel. This is marked in the chart below as a green color dotted line.
Daily chart – FRPT
FRPT – Uptrend Channel
#3 Open Lending Corporation (NASDAQ: LPRO)
Sector: Financial | Credit Services
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 LPRO is if the stock has a daily close above the breakout level of the consolidation area and closes above the price of around $43.50. This is marked in the chart below as a green color dotted line.
Daily chart – LPRO
LPRO – Consolidation Area
#4 IAC/InterActiveCorp (NASDAQ: IAC)
Sector: Communication Services | Internet Content & Information
Reason: Formation of 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): The ideal buy level for IAC is if the stock breaks out of the flag pattern, at around $176.70. This is marked in the chart below as a green color dotted line.
Daily chart – IAC
IAC – Flag Pattern
#5 Pioneer Natural Resources Company (NYSE: PXD)
Sector: Energy | Oil & Gas E&P
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 PXD is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $173.00. This is marked in the chart below as a green color dotted line.
Daily chart – PXD
PXD – Ascending Triangle Pattern
#6 Merck & Co., Inc. (NYSE: MRK)
Sector: Healthcare | Drug Manufacturers – General
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 MRK is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $78.00. This is marked in the chart below as a green color dotted line.
Daily chart – MRK
MRK- Symmetrical Triangle Pattern
#7 Natera, Inc. (NASDAQ: NTRA)
Sector: Healthcare | Diagnostics & Research
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 NTRA is if the stock has a daily close above the breakout level of the consolidation area and closes above the price of around $125.00. This is marked in the chart below as a green color dotted line.
Daily chart – NTRA
NTRA – Consolidation Area
#8 Horizon Therapeutics Public Limited Company (NASDAQ: HZNP)
Sector: Healthcare | Drug Manufacturers – General
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 HZNP is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $97.20. This is marked in the chart below as a green color dotted line.
Daily chart – HZNP
HZNP- Ascending Triangle Pattern
#9 Evolent Health, Inc. (NYSE: EVH)
Sector: Healthcare | Health Information Services
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 EVH is if the stock has a daily close above the breakout level of the consolidation area and closes above the price of around $22.00. This is marked in the chart below as a green color dotted line.
Daily chart – EVH
EVH – Consolidation Area
#10 Arcus Biosciences, Inc. (NYSE: RCUS)
Sector: Healthcare | Biotechnology
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 ideal buy level for RCUS is if the stock has a daily close above the breakout level of the downtrend channel, at around $32.00. This is marked in the chart below as a green color dotted line.
Daily chart – RCUS
RCUS – Downtrend Channel
Happy Trading!
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