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 | Doximity, Inc. | NYSE: DOCS | $73.48 | $79.00 | Downtrend Channel Breakout |
| 2 | Vuzix Corporation | NASDAQ: VUZI | $14.87 | $15.20 | Falling Wedge Pattern Breakout |
| 3 | CyrusOne Inc. | NASDAQ: CONE | $85.45 | $86.70 | Rounding Bottom |
| 4 | Array Technologies, Inc. | NASDAQ: ARRY | $26.55 | $27.30 | Uptrend Channel Breakout |
| 5 | EVgo, Inc. | NASDAQ: EVGO | $18.90 | $19.80 | Downtrend Channel Breakout |
| 6 | Farfetch Limited | NYSE: FTCH | $46.37 | $51.50 | Falling Wedge Pattern Breakout |
| 7 | Johnson & Johnson | NYSE: JNJ | $165.01 | $170.50 | Uptrend Channel |
| 8 | Babcock & Wilcox Enterprises, Inc. | NYSE: BW | $9.83 | $10.20 | Downtrend Channel Breakout |
| 9 | Adecoagro S.A. | NYSE: AGRO | $10.25 | $10.50 | Symmetrical Triangle Pattern Breakout |
| 10 | Colfax Corporation | NYSE: CFX | $51.97 | $53.00 | Flag Pattern 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 Doximity, Inc. (NYSE: DOCS)
Sector: Healthcare | Health Information Services
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 DOCS is if the stock has a daily close above $79.00. This is marked in the chart below as a green color dotted line.
Daily chart – DOCS
DOCS – Downtrend Channel Breakout
#2 Vuzix Corporation (NASDAQ: VUZI)
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 VUZI is above the nearest resistance level of $15.20. This is marked in the chart below as a green color dotted line.
Daily chart – VUZI
VUZI – Falling Wedge Pattern Breakout
#3 CyrusOne Inc. (NASDAQ: CONE)
Sector: Real Estate | REIT – Specialty
Reason: Formation of a Rounding Bottom Pattern
A rounding bottom pattern, also referred to as a saucer bottom, is a reversal chart pattern. It is identified by a series of price movements that graphically form the shape of a “U”. Rounding bottoms are found at the end of extended downward trends and signify a reversal in long-term price movements.
Buy Level(s): The ideal buy level for CONE is if the stock breaks out of the rounding bottom pattern and has a daily close above $86.70. This is marked in the chart below as a green color dotted line.
Daily chart – CONE
CONE – Rounding Bottom Pattern
#4 Array Technologies, Inc. (NASDAQ: ARRY)
Sector: Technology | Solar
Reason: Breakout From an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The stock has currently broken out of the uptrend channel. However, the ideal buy level for ARRY is if the stock has a daily close above the near-term resistance level of $27.30. This is marked in the chart below as a green color dotted line.
Daily chart – ARRY
ARRY – Uptrend Channel Breakout
#5 EVgo, Inc. (NASDAQ: EVGO)
Sector: Consumer Cyclical | Specialty Retail
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 EVGO is if the stock has a daily close above $19.80. This is marked in the chart below as a green color dotted line.
Daily chart – EVGO
EVGO – Downtrend Channel Breakout
#6 Farfetch Limited (NYSE: FTCH)
Sector: Consumer Cyclical | Internet Retail
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 FTCH is above the nearest resistance level of $51.50. This is marked in the chart below as a green color dotted line.
Daily chart – FTCH
FTCH – Falling Wedge Pattern Breakout
#7 Johnson & Johnson (NYSE: JNJ)
Sector: Healthcare | Drug Manufacturers – General
Reason: Formation of an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for JNJ is if the stock has a daily close above the near-term resistance level of $170.50 within the uptrend channel. This is marked in the chart below as a green color dotted line.
Daily chart – JNJ
JNJ – Uptrend Channel
#8 Babcock & Wilcox Enterprises, Inc. (NYSE: BW)
Sector: Industrials | Specialty Industrial Machinery
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 BW is if the stock has a daily close above $10.20. This is marked in the chart below as a green color dotted line.
Daily chart – BW
BW – Downtrend Channel Breakout
#9 Adecoagro S.A. (NYSE: AGRO)
Sector: Consumer Defensive | Farm Products
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 AGRO is if the stock closes above the immediate resistance level of $10.50. This is marked in the chart below as a green color dotted line.
Daily chart – AGRO
AGRO – Symmetrical Triangle Pattern Breakout
#10 Colfax Corporation (NYSE: CFX)
Sector: Industrials | Specialty Industrial Machinery
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 CFX is above the near-term resistance level of $53.00. This is marked in the chart below as a green color dotted line.
Daily chart – CFX
CFX – Flag Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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