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 | Angi Inc. | NASDAQ: ANGI | $14.40 | $15.20 | Downtrend Channel Breakout |
| 2 | Dell Technologies Inc. | NYSE: DELL | $103.88 | $104.30 | Ascending Triangle Pattern |
| 3 | Canoo Inc. | NASDAQ: GOEV | $9.04 | $10.00 | Falling Wedge Pattern Breakout |
| 4 | BGC Partners, Inc. | NASDAQ: BGCP | $5.10 | $5.90 | Flag Pattern |
| 5 | Euronav NV | NYSE: EURN | $9.22 | $10.00 | Consolidation Area |
| 6 | Molecular Templates, Inc. | NASDAQ: MTEM | $7.60 | $7.90 | Falling Wedge Pattern Breakout |
| 7 | The Cheesecake Factory Incorporated | NASDAQ: CAKE | $49.50 | $52.00 | Downtrend Channel Breakout |
| 8 | Sinclair Broadcast Group, Inc. | NASDAQ: SBGI | $32.36 | $33.00 | Falling Wedge Pattern Breakout |
| 9 | Hyatt Hotels Corporation | NYSE: H | $79.76 | $81.00 | Downtrend Channel Breakout |
| 10 | Companhia de Saneamento Basico do Estado de Sao Paulo | NYSE: SBS | $7.14 | $7.40 | Falling Wedge 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 Angi Inc. (NASDAQ: ANGI)
Sector: Communication Services | Internet Content & Information
Reason: Breakout from 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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for ANGI is above the price of $15.20. This is marked in the chart below as a green color dotted line.
Daily chart – ANGI
ANGI – Downtrend Channel Breakout
#2 Dell Technologies Inc. (NYSE: DELL)
Sector: Technology | Computer Hardware
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 DELL is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $104.30. This is marked in the chart below as a green color dotted line.
Daily chart – DELL
DELL – Ascending Triangle Pattern
#3 Canoo Inc. (NASDAQ: GOEV)
Sector: Consumer Cyclical | Auto Manufacturers
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 GOEV is above the nearest resistance level of $10.00. This is marked in the chart below as a green color dotted line.
Daily chart – GOEV
GOEV – Falling Wedge Pattern Breakout
#4 BGC Partners, Inc. (NASDAQ: BGCP)
Sector: Financial | Capital Markets
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 BGCP is if the stock breaks out of the flag pattern, at around $5.90. This is marked in the chart below as a green color dotted line.
Daily chart – BGCP
BGCP – Flag Pattern
#5 Euronav NV (NYSE: EURN)
Sector: Energy | Oil & Gas Midstream
Reason: Formation of a Consolidation Area
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 EURN is if the stock has a daily close above the breakout level of the consolidation area, at around $10.00. This is marked in the chart below as a green color dotted line.
Daily chart – EURN
EURN – Consolidation Area
#6 Molecular Templates, Inc. (NASDAQ: MTEM)
Sector: Healthcare | Biotechnology
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 MTEM is above the nearest resistance level of $7.90. This is marked in the chart below as a green color dotted line.
Daily chart – MTEM
MTEM – Falling Wedge Pattern Breakout
#7 The Cheesecake Factory Incorporated (NASDAQ: CAKE)
Sector: Consumer Cyclical | Restaurants
Reason: Breakout from 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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for CAKE is above the price of $52.00. This is marked in the chart below as a green color dotted line.
Daily chart – CAKE
CAKE – Downtrend Channel Breakout
#8 Sinclair Broadcast Group, Inc. (NASDAQ: SBGI)
Sector: Communication Services | Broadcasting
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 SBGI is above the nearest resistance level of $33.00. This is marked in the chart below as a green color dotted line.
Daily chart – SBGI
SBGI – Falling Wedge Pattern Breakout
#9 Hyatt Hotels Corporation (NYSE: H)
Sector: Consumer Cyclical | Lodging
Reason: Breakout from 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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for H is above the price of $81.00. This is marked in the chart below as a green color dotted line.
Daily chart – H
H – Downtrend Channel Breakout
#10 Companhia de Saneamento Basico do Estado de Sao Paulo (NYS: SBS)
Sector: Utilities | Utilities – Regulated Water
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 SBS is if the stock breaks out of the falling wedge pattern and closes above the nearest resistance level of $7.40. This is marked in the chart below as a green color dotted line.
Daily chart – SBS
SBS – Falling Wedge Pattern
Happy Trading!
Trades of The Day Research Team
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