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 | Intuit Inc. | NASDAQ: INTU | $409.03 | $416.00 | Falling Wedge Pattern Breakout |
| 2 | Alta Equipment Group Inc. | NYSE: ALTG | $6.90 | $7.20 | Symmetrical Triangle Pattern |
| 3 | Block Inc. | NYSE: XYZ | $63.70 | $65.00 | Downtrend Channel Breakout |
| 4 | Arlo Technologies Inc. | NYSE: ARLO | $15.69 | $15.80 | Falling Wedge Pattern Breakout |
| 5 | Fermi Inc. | NASDAQ: FRMI | $9.97 | $11.90 | Breakout From Consolidation Area |
| 6 | Dell Technologies Inc. | NYSE: DELL | $148.08 | $149.20 | Falling Wedge Pattern Breakout |
| 7 | Paramount Skydance Corp | NASDAQ: PSKY | $13.51 | $13.60 | Downtrend Channel Breakout |
| 8 | Figs Inc. | NYSE: FIGS | $15.45 | $15.50 | Ascending Triangle Pattern Breakout |
| 9 | Sony Group Corporation ADR | NYSE: SONY | $23.06 | $23.30 | Falling Wedge Pattern Breakout |
| 10 | Figma Inc. | NYSE: FIG | $29.39 | $32.10 | 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 Intuit Inc. (NASDAQ: INTU)
Sector: Technology • Software – Application
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 INTU is above the nearest resistance level of $416.00. This is marked in the chart below as a green color dotted line.
Daily chart – INTU
INTU – Falling Wedge Pattern Breakout
#2 Alta Equipment Group Inc. (NYSE: ALTG)
Sector: Industrials • Rental & Leasing Services
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 ALTG is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $7.20. This is marked in the chart below as a green color dotted line.
Daily chart – ALTG
ALTG – Symmetrical Triangle Pattern
#3 Block Inc. (NYSE: XYZ)
Sector: Technology • Software – Infrastructure
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 XYZ is if the stock has a daily close above $65.00. This is marked in the chart below as a green color dotted line.
Daily chart – XYZ
XYZ – Downtrend Channel Breakout
#4 Arlo Technologies Inc. (NYSE: ARLO)
Sector: Industrials • Building Products & Equipment
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 ARLO is above the nearest resistance level of $15.80. This is marked in the chart below as a green color dotted line.
Daily chart – ARLO
ARLO – Falling Wedge Pattern Breakout
#5 Fermi Inc. (NASDAQ: FRMI)
Sector: Real Estate • REIT – Specialty
Reason: Breakout From 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): Although the stock has currently broken out of a consolidation area, the ideal buy level for FRMI is above the near-term resistance area, which translates to a price of around $11.90. This is marked in the chart below as a green color dotted line.
Daily chart – FRMI
FRMI – Breakout From Consolidation Area
#6 Dell Technologies Inc. (NYSE: DELL)
Sector: Technology • Computer Hardware
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 DELL is above the nearest resistance level of $149.20. This is marked in the chart below as a green color dotted line.
Daily chart – DELL
DELL – Falling Wedge Pattern Breakout
#7 Paramount Skydance Corp (NASDAQ: PSKY)
Sector: Communication Services • Entertainment
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 PSKY is if the stock has a daily close above $13.60. This is marked in the chart below as a green color dotted line.
Daily chart – PSKY
PSKY – Downtrend Channel Breakout
#8 Figs Inc. (NYSE: FIGS)
Sector: Consumer Cyclical • Apparel Manufacturing
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): The daily chart shows that the stock has currently broken out of an ascending triangle pattern. The ideal buy level for FIGS is if the stock has a daily close above $15.50. This is marked in the chart below as a green color dotted lines.
Daily chart – FIGS
FIGS – Ascending Triangle Pattern Breakout
#9 Sony Group Corporation ADR (NYSE: SONY)
Sector: Technology • Consumer Electronics
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 SONY is above the nearest resistance level of $23.30. This is marked in the chart below as a green color dotted line.
Daily chart – SONY
SONY – Falling Wedge Pattern Breakout
#10 Figma Inc. (NYSE: FIG)
Sector: Technology • Software – Application
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 FIG is if the stock breaks out of the downtrend channel and has a daily close above $32.10. This is marked in the chart below as a green color dotted line.
Daily chart – FIG
FIG – Downtrend Channel
Happy Trading!
Trades of The Day Research Team
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