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) | Symmetrical Triangle Pattern |
| 1 | Quanterix Corporation | NASDAQ: QTRX | $11.73 | $13.00 | Symmetrical Triangle Pattern |
| 2 | Cisco Systems, Inc. | NASDAQ: CSCO | $47.79 | $48.30 | Falling Wedge Pattern Breakout |
| 3 | Taiwan Semiconductor Manufacturing Company Limited | NYSE: TSM | $82.27 | $85.00 | Downtrend Channel Breakout |
| 4 | DICK’S Sporting Goods, Inc. | NYSE: DKS | $109.09 | $114.00 | Symmetrical Triangle Pattern |
| 5 | Target Corporation | NYSE: TGT | $162.88 | $174.00 | Consolidation Area |
| 6 | Bath & Body Works, Inc. | NYSE: BBWI | $38.23 | $39.00 | Symmetrical Triangle Pattern Breakout |
| 7 | Burlington Stores, Inc. | NYSE: BURL | $157.86 | $162.80 | Downtrend Channel Breakout |
| 8 | Ryder System, Inc. | NYSE: R | $90.16 | $90.50 | Ascending Triangle Pattern Breakout |
| 9 | Alibaba Group Holding Limited | NYSE: BABA | $80.48 | $84.50 | Falling Wedge Pattern Breakout |
| 10 | Johnson & Johnson | NYSE: JNJ | $176.20 | $179.80 | 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 Quanterix Corporation (NASDAQ: QTRX)
Sector: Healthcare | Medical Devices
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 QTRX is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $13.00. This is marked in the chart below as a green color dotted line.
Daily chart – QTRX
QTRX – Symmetrical Triangle Pattern
#2 Cisco Systems, Inc. (NASDAQ: CSCO)
Sector: Technology | Communication 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 CSCO is above the nearest resistance level of $48.30. This is marked in the chart below as a green color dotted line.
Daily chart – CSCO
CSCO – Falling Wedge Pattern Breakout
#3 Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)
Sector: Technology | Semiconductors
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 TSM is if the stock has a daily close above $85.00. This is marked in the chart below as a green color dotted line.
Daily chart – TSM
TSM – Downtrend Channel Breakout
#4 DICK’S Sporting Goods, Inc. (NYSE: DKS)
Sector: Consumer Cyclical | Specialty Retail
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 DKS is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $114.00. This is marked in the chart below as a green color dotted line.
Daily chart – DKS
DKS – Symmetrical Triangle Pattern
#5 Target Corporation (NYSE: TGT)
Sector: Consumer Defensive | Discount Stores
Reason: Formation of 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): The ideal buy level for TGT is above the price of around $174.00. This is marked in the chart below as a green color dotted line.
Daily chart – TGT
TGT – Consolidation Area
#6 Bath & Body Works, Inc. (NYSE: BBWI)
Sector: Consumer Cyclical | Specialty Retail
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 BBWI is if the stock closes above the immediate resistance level of $39.00. This is marked in the chart below as a green color dotted line.
Daily chart – BBWI
BBWI – Symmetrical Triangle Pattern Breakout
#7 Burlington Stores, Inc. (NYSE: BURL)
Sector: Consumer Cyclical | Apparel 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 BURL is if the stock has a daily close above $162.80. This is marked in the chart below as a green color dotted line.
Daily chart – BURL
BURL – Downtrend Channel Breakout
#8 Ryder System, Inc. (NYSE: R)
Sector: Industrials | Rental & Leasing Services
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 stock has currently broken out of an ascending triangle pattern. However, the ideal buy level for R is if the stock closes above the immediate resistance level of $90.50. This is marked in the chart below as a green color dotted line.
Daily chart – R
R – Ascending Triangle Pattern Breakout
#9 Alibaba Group Holding Limited (NYSE: BABA)
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 BABA is above the nearest resistance level of $84.50. This is marked in the chart below as a green color dotted line.
Daily chart – BABA
BABA – Falling Wedge Pattern Breakout
#10 Johnson & Johnson (NYSE: JNJ)
Sector: Healthcare | Drug Manufacturers – General
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 JNJ is if the stock has a daily close above $179.80. This is marked in the chart below as a green color dotted line.
Daily chart – JNJ
JNJ – Downtrend Channel Breakout
Happy Trading!
Trades of The Day Research Team
Collect up to 5 dividend checks per week [sponsor]Hi, I'm Tim Plaehn, and I just did the math in my own, real-money portfolio. I'll be collecting 70 dividend checks this quarter. That's nearly 5 per week on average. Automatically… no trading, no options, no work. You don't need a lot of money. You can be retired or near retirement... Either way, I'll show you my #1 plan to quickly collect dividends like clockwork from high-quality, cash-flowing business. Click here to learn how to collect up to 5 dividends a week.
Source: Trades of the Day