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 | Palantir Technologies Inc. | NYSE: PLTR | $28.71 | $31.00 | Symmetrical Triangle Pattern Breakout |
| 2 | Butterfly Network, Inc. | NYSE: BFLY | $12.54 | $15.50 | Double Bottom Pattern |
| 3 | Surface Oncology, Inc. | NASDAQ: SURF | $7.10 | $7.70 | Falling Wedge Pattern Breakout |
| 4 | Stem, Inc. | NYSE: STEM | $25.94 | $28.60 | Symmetrical Triangle Pattern |
| 5 | Gentex Corporation | NASDAQ: GNTX | $32.24 | $33.60 | Downtrend Channel |
| 6 | The Hartford Financial Services Group, Inc. | NYSE: HIG | $69.56 | $70.70 | Ascending Triangle Pattern |
| 7 | Proterra Inc. | NASDAQ: PTRA | $10.32 | $14.50 | Falling Wedge Pattern |
| 8 | Unity Software Inc. | NYSE: U | $139.69 | $140.70 | Symmetrical Triangle Pattern Breakout |
| 9 | Organogenesis Holdings Inc. | NASDAQ: ORGO | $16.66 | $18.10 | Flag Pattern |
| 10 | SmileDirectClub, Inc. | NASDAQ: SDC | $6.70 | $7.60 | Downtrend Channel Breakout |
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 Palantir Technologies Inc. (NYSE: PLTR)
Sector: Technology | Software – Infrastructure
Reason: Breakout From 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): Although the stock has currently broken out of a symmetrical triangle pattern, the ideal buy level for PLTR is above the near-term resistance of $31.00. This is marked in the chart below as a green color dotted line.
Daily chart – PLTR
PLTR – Symmetrical Triangle Pattern Breakout
#2 Butterfly Network, Inc. (NYSE: BFLY)
Sector: Healthcare | Medical Devices
Reason: Formation of a Double Bottom Pattern
A Double Bottom Pattern looks like the letter W and is characterized by two well-defined lows at approximately the same price level. This twice-touched low is usually a very strong support level. The high point between the two bottoms’ resistance level is called a neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
Buy Level(s): The ideal buy level for BFLY is above the neckline of the double bottom pattern, at around $15.50. This is marked in the chart below as a green color dotted line.
Daily chart – BFLY
BFLY – Double Bottom Pattern
#3 Surface Oncology, Inc. (NASDAQ: SURF)
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 SURF is above the nearest resistance level of $7.70. This is marked in the chart below as a green color dotted line.
Daily chart – SURF
SURF – Falling Wedge Pattern Breakout
#4 Stem, Inc. (NYSE: STEM)
Sector: Technology | Software – Infrastructure
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 STEM is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $28.60. This is marked in the chart below as a green color dotted line.
Daily chart – STEM
STEM – Symmetrical Triangle Pattern
#5 Gentex Corporation (NASDAQ: GNTX)
Sector: Consumer Cyclical | Auto Parts
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 GNTX is if the stock has a daily close above the breakout level of the downtrend channel, and closes above $33.60. This is marked in the chart below as a green color dotted line.
Daily chart – GNTX
GNTX – Downtrend Channel
#6 The Hartford Financial Services Group, Inc. (NYSE: HIG)
Sector: Financial | Insurance – Diversified
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 HIG is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $70.70. This is marked in the chart below as a green color dotted line.
Daily chart – HIG
HIG – Ascending Triangle Pattern
#7 Proterra Inc. (NASDAQ: PTRA)
Sector: Consumer Cyclical | Auto Manufacturers
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 PTRA is if the stock breaks out of the falling wedge pattern and closes above the nearest resistance level of $14.50. This is marked in the chart below as a green color dotted line.
Daily chart – PTRA
PTRA – Falling Wedge Pattern
#8 Unity Software Inc. (NYSE: U)
Sector: Technology | Software – Application | USA
Reason: Breakout From 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): Although the stock has currently broken out of a symmetrical triangle pattern, the ideal buy level for U is above the near-term resistance of $140.70. This is marked in the chart below as a green color dotted line.
Daily chart – U
U – Symmetrical Triangle Pattern Breakout
#9 Organogenesis Holdings Inc. (NASDAQ: ORGO)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
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 ORGO is if the stock breaks out of the flag pattern, at around $18.10. This is marked in the chart below as a green color dotted line.
Daily chart – ORGO
ORGO – Flag Pattern
#10 SmileDirectClub, Inc. (NASDAQ: SDC)
Sector: Healthcare | Medical Devices
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 SDC is above the price of $7.60. This is marked in the chart below as a green color dotted line.
Daily chart – SDC
SDC – Downtrend Channel Breakout
Happy Trading!
Trades of The Day Research Team