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 | Star Bulk Carriers Corp | NASDAQ: SBLK | $18.48 | $18.90 | Falling Wedge Pattern Breakout |
| 2 | Mirati Therapeutics Inc | NASDAQ: MRTX | $41.00 | $43.00 | Downtrend Channel |
| 3 | Enterprise Products Partners L P | NYSE: EPD | $27.39 | $27.70 | Ascending Triangle Pattern Breakout |
| 4 | MEI Pharma Inc | NASDAQ: MEIP | $7.55 | $8.30 | Consolidation Area |
| 5 | United health Group Inc | NYSE: UNH | $506.10 | $511.40 | Downtrend Channel |
| 6 | United States Steel Corp. | NYSE: X | $32.00 | $32.10 | Flag Pattern Breakout |
| 7 | Vmware Inc. | NYSE: VMW | $167.23 | $168.80 | Ascending Triangle Pattern |
| 8 | Corebridge Financial Inc. | NYSE: CRBG | $19.43 | $19.80 | Symmetrical Triangle Pattern Breakout |
| 9 | Bumble Inc. | NASDAQ: BMBL | $14.65 | $18.80 | Falling Wedge Pattern |
| 10 | Dana Inc | NYSE: DAN | $14.98 | $15.30 | 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 Star Bulk Carriers Corp (NASDAQ: SBLK)
Sector: Industrials | Marine Shipping
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 SBLK is above the nearest resistance level of $18.90. This is marked in the chart below as a green color dotted line.
Daily chart – SBLK
SBLK – Falling Wedge Pattern Breakout
#2 Mirati Therapeutics Inc. (NASDAQ: MRTX)
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 daily chart shows that the stock is currently forming a downtrend channel. The ideal buy level for MRTX is if the stock breaks out of the downtrend channel and has a daily close above $43.00. This is marked in the chart below as a green color dotted line.
Daily chart – MRTX
MRTX – Downtrend Channel
#3 Enterprise Products Partners L P (NYSE: EPD)
Sector: Energy | Oil & Gas Midstream
Reason: Breakout From 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): Although the stock has broken out of the ascending triangle pattern, the ideal buy level for EPD is if the stock has a daily close above the near-term resistance level of $27.70. This is marked in the chart below as a green color dotted line.
Daily chart – EPD
EPD – Ascending Triangle Pattern Breakout
#4 MEI Pharma Inc. (NASDAQ: MEIP)
Sector: Healthcare | Biotechnology
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 MEIP is above the breakout level of the consolidation area, at around $8.30. This is marked in the chart below as a green color dotted line.
Daily chart – MEIP
MEIP – Consolidation Area
#5 Unitedhealth Group Inc. (NYSE: UNH)
Sector: Healthcare | Healthcare Plans
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 UNH is if the stock breaks out of the downtrend channel and has a daily close above $511.40. This is marked in the chart below as a green color dotted line.
Daily chart – UNH
UNH – Downtrend Channel
#6 United States Steel Corp. (NYSE: X)
Sector: Basic Materials | Steel
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 X is above the near-term resistance level of $32.10. This is marked in the chart below as a green color dotted line.
Daily chart – X
X Flag Pattern Breakout
#7 Vmware Inc. (NYSE: VMW)
Sector: Technology | Software – Infrastructure
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 VMW is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $168.80. This is marked in the chart below as a green color dotted line.
Daily chart – VMW
VMW – Ascending Triangle Pattern
#8 Corebridge Financial Inc. (NYSE: CRBG)
Sector: Financial | Asset Management
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 CRBG is if the stock closes above the immediate resistance level of $19.80. This is marked in the chart below as a green color dotted line.
Daily chart – CRBG
CRBG – Symmetrical Triangle Pattern Breakout
#9 Bumble Inc. (NASDAQ: BMBL)
Sector: Technology | Software – Application
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 BMBL is if the stock breaks out of the falling wedge pattern, at a price of around $18.80. This is marked in the chart below as a green color dotted line.
Daily chart – BMBL
BMBL – Falling Wedge Pattern
#10 Dana Inc. (NYSE: DAN)
Sector: Consumer Cyclical | Auto Parts
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 DAN is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $15.30. This is marked in the chart below as a green color dotted line.
Daily chart – DAN
DAN – Symmetrical Triangle Pattern
Happy Trading!
Trades of The Day Research Team