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 | Advanced Micro Devices, Inc. | NASDAQ: AMD | $82.67 | $86.00 | Downtrend Channel Breakout |
| 2 | Pan American Silver Corp. | NASDAQ: PAAS | $15.56 | $17.50 | Symmetrical Triangle Pattern |
| 3 | Diversey Holdings, Ltd. | NASDAQ: DSEY | $8.11 | $8.30 | Downtrend Channel Breakout |
| 4 | IAA, Inc. | NYSE: IAA | $41.51 | $41.80 | Flag Pattern Breakout |
| 5 | Solo Brands, Inc. | NYSE: DTC | $5.49 | $5.60 | Breakout From Consolidation Area |
| 6 | The Kroger Co. | NYSE: KR | $47.10 | $47.50 | Symmetrical Triangle Pattern Breakout |
| 7 | Asana, Inc. | NYSE: ASAN | $19.15 | $21.40 | Downtrend Channel Breakout |
| 8 | Roblox Corporation | NYSE: RBLX | $40.05 | $47.00 | Double Bottom Pattern |
| 9 | Iovance Biotherapeutics, Inc. | NASDAQ: IOVA | $6.21 | $7.00 | Symmetrical Triangle Pattern |
| 10 | Enovix Corporation | NASDAQ: ENVX | $9.56 | $10.40 | Downtrend Channel |
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 Advanced Micro Devices, Inc. (NASDAQ: AMD)
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 AMD is if the stock has a daily close above $86.00. This is marked in the chart below as a green color dotted line.
Daily chart – AMD
AMD – Downtrend Channel Breakout
#2 Pan American Silver Corp. (NASDAQ: PAAS)
Sector: Basic Materials | Silver
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 PAAS is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $17.50. This is marked in the chart below as a green color dotted line.
Daily chart – PAAS
PAAS – Symmetrical Triangle Pattern
#3 Diversey Holdings, Ltd. (NASDAQ: DSEY)
Sector: Consumer Cyclical | Personal 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 DSEY is if the stock has a daily close above $8.30. This is marked in the chart below as a green color dotted line.
Daily chart – DSEY
DSEY – Downtrend Channel Breakout
#4 IAA, Inc. (NYSE: IAA)
Sector: Consumer Cyclical | Auto & Truck Dealerships
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 IAA is above the near-term resistance level of $41.80. This is marked in the chart below as a green color dotted line.
Daily chart – IAA
IAA – Flag Pattern Breakout
#5 Solo Brands, Inc. (NYSE: DTC)
Sector: Consumer Cyclical | Internet Retail
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 DTC is above the near-term resistance area, which translates to a price of around $5.60. This is marked in the chart below as a green color dotted line.
Daily chart – DTC
DTC – Breakout From Consolidation Area
#6 The Kroger Co. (NYSE: KR)
Sector: Consumer Defensive | Grocery Stores
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 KR is if the stock closes above the immediate resistance level of $47.50. This is marked in the chart below as a green color dotted line.
Daily chart – KR
KR – Symmetrical Triangle Pattern Breakout
#7 Asana, Inc. (NYSE: ASAN)
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): 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 ASAN is if the stock has a daily close above $21.40. This is marked in the chart below as a green color dotted line.
Daily chart – ASAN
ASAN – Downtrend Channel Breakout
#8 Roblox Corporation (NYSE: RBLX)
Sector: Communication Services | Electronic Gaming & Multimedia
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 the neckline. Once a breakout happens from this key price level (neckline), it signifies the start of a bullish move.
Buy Level(s): The stock is currently forming a double bottom pattern. The ideal buy level for RBLX is above the near-term resistance level of around $47.00. This is marked in the chart below as a green color dotted line.
Daily chart – RBLX
RBLX – Double Bottom Pattern
#9 Iovance Biotherapeutics, Inc. (NASDAQ: IOVA)
Sector: Healthcare | Biotechnology
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 IOVA is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $7.00. This is marked in the chart below as a green color dotted line.
Daily chart – IOVA
IOVA – Symmetrical Triangle Pattern
#10 Enovix Corporation (NASDAQ: ENVX)
Sector: Industrials | Electrical Equipment & Parts
Reason: Downtrend Channel Pattern
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 ENVX is if the stock breaks out of the downtrend channel and closes above the price of $10.40. This is marked in the chart below as a green color dotted line.
Daily chart – ENVX
ENVX – Downtrend Channel
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day