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 | Amazon.com, Inc. | NASDAQ: AMZN | $134.95 | $138.10 | Breakout From Consolidation Area |
| 2 | Microsoft Corporation | NASDAQ: MSFT | $280.74 | $282.00 | Downtrend Channel Breakout |
| 3 | Five9, Inc. | NASDAQ: FIVN | $108.12 | $109.50 | Symmetrical Triangle Pattern Breakout |
| 4 | NETGEAR, Inc. | NASDAQ: NTGR | $25.78 | $26.00 | Downtrend Channel Breakout |
| 5 | Vornado Realty Trust | NYSE: VNO | $30.39 | $30.70 | Falling Wedge Pattern Breakout |
| 6 | Plug Power Inc. | NASDAQ: PLUG | $21.34 | $22.60 | Symmetrical Triangle Pattern Breakout |
| 7 | Ford Motor Company | NYSE: F | $14.69 | $15.00 | Downtrend Channel Breakout |
| 8 | Morgan Stanley | NYSE: MS | $84.30 | $85.30 | Falling Wedge Pattern Breakout |
| 9 | Sunrun Inc. | NASDAQ: RUN | $32.69 | $33.50 | Symmetrical Triangle Pattern Breakout |
| 10 | National Instruments Corporation | NASDAQ: NATI | $38.00 | $38.30 | 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 Amazon.com, Inc. (NASDAQ: AMZN)
Sector: Consumer Cyclical | Internet Retail
Reason: Breakout From a Consolidation Area
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 AMZN is above the near-term resistance area, which translates to a price of around $138.10. This is marked in the chart below as a green color dotted line.
Daily chart – AMZN
AMZN – Breakout From Consolidation Area
#2 Microsoft Corporation (NASDAQ: MSFT)
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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for MSFT is above the near-term resistance area, which translates to a price of around $282.00. This is marked in the chart below as a green color dotted line.
Daily chart – MSFT
MSFT – Downtrend Channel Breakout
#3 Five9, Inc. (NASDAQ: FIVN)
Sector: Technology | Software – Infrastructure
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 FIVN is if the stock closes above the immediate resistance level of $109.50. This is marked in the chart below as a green color dotted line.
Daily chart – FIVN
FIVN – Symmetrical Triangle Pattern Breakout
#4 NETGEAR, Inc. (NASDAQ: NTGR)
Sector: Technology | Communication Equipment
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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for NTGR is above the near-term resistance area, which translates to a price of around $26.00. This is marked in the chart below as a green color dotted line.
Daily chart – NTGR
NTGR – Downtrend Channel Breakout
#5 Vornado Realty Trust (NYSE: VNO)
Sector: Real Estate | REIT – Office
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 VNO is above the nearest resistance level of $30.70. This is marked in the chart below as a green color dotted line.
Daily chart – VNO
VNO – Falling Wedge Pattern Breakout
#6 Plug Power Inc. (NASDAQ: PLUG)
Sector: Industrials | Electrical Equipment & Parts
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 PLUG is if the stock closes above the immediate resistance level of $22.60. This is marked in the chart below as a green color dotted line.
Daily chart – PLUG
PLUG – Symmetrical Triangle Pattern Breakout
#7 Ford Motor Company (NYSE: F)
Sector: Consumer Cyclical | Auto Manufacturers
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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for F is above the near-term resistance area, which translates to a price of around $15.00. This is marked in the chart below as a green color dotted line.
Daily chart – F
F – Downtrend Channel Breakout
#8 Morgan Stanley (NYSE: MS)
Sector: Financial | Capital Markets
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 MS is above the nearest resistance level of $85.30. This is marked in the chart below as a green color dotted line.
Daily chart – MS
MS – Falling Wedge Pattern Breakout
#9 Sunrun Inc. (NASDAQ: RUN)
Sector: Technology | Solar
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 RUN is if the stock closes above the immediate resistance level of $33.50. This is marked in the chart below as a green color dotted line.
Daily chart – RUN
RUN – Symmetrical Triangle Pattern Breakout
#10 National Instruments Corporation (NASDAQ: NATI)
Sector: Technology | Software – Application
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): Although the stock has currently broken out of the downtrend channel, the ideal buy level for NATI is above the near-term resistance area, which translates to a price of around $38.30. This is marked in the chart below as a green color dotted line.
Daily chart – NATI
NATI – Downtrend Channel Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day