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 | Marriott International, Inc. | NASDAQ: MAR | $155.97 | $158.00 | Flag Pattern Breakout |
| 2 | SunPower Corporation | NASDAQ: SPWR | $24.87 | $30.70 | Falling Wedge Pattern Breakout |
| 3 | Box, Inc. | NYSE: BOX | $24.81 | $26.50 | Symmetrical Triangle Pattern |
| 4 | Aramark | NYSE: ARMK | $35.78 | $36.50 | Downtrend Channel Pattern Breakout |
| 5 | Nutrien Ltd. | NYSE: NTR | $67.20 | $67.50 | Flag Pattern Breakout |
| 6 | Live Nation Entertainment, Inc. | NYSE: LYV | $98.73 | $99.10 | Breakout From Consolidation Area |
| 7 | TripAdvisor, Inc. | NASDAQ: TRIP | $36.99 | $39.20 | Downtrend Channel Pattern |
| 8 | NatWest Group plc | NYSE: NWG | $6.11 | $6.20 | Ascending Triangle Pattern |
| 9 | Triumph Group, Inc. | NYSE: TGI | $20.95 | $21.50 | Symmetrical Triangle Pattern Breakout |
| 10 | RingCentral, Inc. | NYSE: RNG | $228.69 | $236.50 | 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 Marriott International, Inc. (NASDAQ: MAR)
Sector: Consumer Cyclical | Lodging
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 MAR is above the near-term resistance level of $158.00. This is marked in the chart below as a green color dotted line.
Daily chart – MAR
MAR – Flag Pattern Breakout
#2 SunPower Corporation (NASDAQ: SPWR)
Sector: Technology | Solar
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 SPWR is above the nearest resistance level of $30.70. This is marked in the chart below as a green color dotted line.
Daily chart – SPWR
SPWR – Falling Wedge Pattern Breakout
#3 Box, Inc. (NYSE: BOX)
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 BOX is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $26.50. This is marked in the chart below as a green color dotted line.
Daily chart – BOX
BOX – Symmetrical Triangle Pattern
#4 Aramark (NYSE: ARMK)
Sector: Consumer Cyclical | Restaurants
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.
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 a downtrend channel. However, there is a near-term resistance level for the stock. Hence, the ideal buy level for ARMK is if the stock has a daily close above $36.50. This is marked in the chart below as a green color dotted line.
Daily chart – ARMK
ARMK – Downtrend Channel Pattern Breakout
#5 Nutrien Ltd. (NYSE: NTR)
Sector: Basic Materials | Agricultural Inputs
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 NTR is above the near-term resistance level of $67.50. This is marked in the chart below as a green color dotted line.
Daily chart – NTR
NTR – Flag Pattern Breakout
#6 Live Nation Entertainment, Inc. (NYSE: LYV)
Sector: Communication Services | Entertainment
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 LYV is above the near-term resistance area, which translates to a price of around $99.10. This is marked in the chart below as a green color dotted line.
Daily chart – LYV
LYV – Breakout From Consolidation Area
#7 TripAdvisor, Inc. (NASDAQ: TRIP)
Sector: Consumer Cyclical | Travel Services
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 TRIP is if the stock has a daily close above the breakout level of the downtrend channel, at around $39.20. This is marked in the chart below as a green color dotted line.
Daily chart – TRIP
TRIP – Downtrend Channel Pattern
#8 NatWest Group plc (NYSE: NWG)
Sector: Financial | Banks – 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 NWG is if the stock has a daily close above the breakout level of the ascending triangle pattern, at around $6.20. This is marked in the chart below as a green color dotted line.
Daily chart – NWG
NWG – Ascending Triangle Pattern
#9 Triumph Group, Inc. (NYSE: TGI)
Sector: Industrials | Aerospace & Defense
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 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 stock has currently broken out of a symmetrical triangle pattern. However, the ideal buy level for TGI is if the stock closes above the immediate resistance level of $21.50. This is marked in the chart below as a green color dotted line.
Daily chart – TGI
TGI – Symmetrical Triangle Pattern Breakout
#10 RingCentral, Inc. (NYSE: RNG)
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 RNG is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $236.50. This is marked in the chart below as a green color dotted line.
Daily chart – RNG
RNG – Falling Wedge Pattern
Happy Trading!
Trades of The Day Research Team