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 | Turtle Beach Corp | NASDAQ: HEAR | $15.41 | $15.80 | Breakout From Consolidation Area |
| 2 | Louisiana-Pacific Corp. | NYSE: LPX | $78.44 | $78.80 | Symmetrical Triangle Pattern Breakout |
| 3 | Conoco Phillips | NYSE: COP | $120.04 | $122.10 | Downtrend Channel Breakout |
| 4 | Freeport-McMoRan Inc. | NYSE: FCX | $44.61 | $44.80 | Symmetrical Triangle Pattern Breakout |
| 5 |
MillerKnoll Inc. |
NASDAQ: MLKN | $30.44 | $30.60 | Ascending Triangle Pattern |
| 6 |
Newell Brands Inc. |
NASDAQ: NWL | $8.18 | $8.50 | Symmetrical Triangle Pattern |
| 7 | Century Communities Inc. | NYSE: CCS | $88.01 | $91.00 | Flag Pattern |
| 8 | Futurefuel Corp | NYSE: FF | $7.06 | $7.20 | Falling Wedge Pattern Breakout |
| 9 | Air Lease Corp | NYSE: AL | $47.13 | $47.40 | Symmetrical Triangle Pattern Breakout |
| 10 |
Illinois Tool Works, Inc. |
NYSE: ITW | $266.92 | $267.40 | Ascending Triangle 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 Turtle Beach Corp (NASDAQ: HEAR)
Sector: Technology • Consumer Electronics
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 HEAR is above the near-term resistance area, which translates to a price of around $15.80. This is marked in the chart below as a green color dotted line.
Daily chart – HEAR
HEAR – Breakout From Consolidation Area
#2 Louisiana-Pacific Corp. (NYSE: LPX)
Sector: Industrials • Building Products & Equipment
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 LPX is if the stock closes above the immediate resistance level of $78.80. This is marked in the chart below as a green color dotted line.
Daily chart – LPX
LPX – Symmetrical Triangle Pattern Breakout
#3 Conoco Phillips (NYSE: COP)
Sector: Energy • Oil & Gas E&P
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 COP is if the stock has a daily close above $122.10. This is marked in the chart below as a green color dotted line.
Daily chart – COP
COP – Downtrend Channel Breakout
#4 Freeport-McMoRan Inc. (NYSE: FCX)
Sector: Basic Materials • Copper
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 FCX is if the stock closes above the immediate resistance level of $44.80. This is marked in the chart below as a green color dotted line.
Daily chart – FCX
FCX – Symmetrical Triangle Pattern Breakout
#5 MillerKnoll Inc. (NASDAQ: MLKN)
Sector: Consumer Cyclical • Furnishings, Fixtures & Appliances
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 MLKN is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $30.60. This is marked in the chart below as a green color dotted line.
Daily chart – MLKN
MLKN – Ascending Triangle Pattern
#6 Newell Brands Inc. (NASDAQ: NWL)
Sector: Consumer Defensive • Household & Personal Products
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 NWL is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $8.50. This is marked in the chart below as a green color dotted line.
Daily chart – NWL
NWL – Symmetrical Triangle Pattern
#7 Century Communities Inc. (NYSE: CCS)
Sector: Consumer Cyclical • Residential Construction
Reason: Formation of 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): The ideal buy level for CCS is if the stock breaks out of the flag pattern, at around $91.00. This is marked in the chart below as a green color dotted line.
Daily chart – CCS
CCS – Flag Pattern
#8 Futurefuel Corp (NYSE: FF)
Sector: Basic Materials • Specialty Chemicals
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 FF is above the nearest resistance level of $7.20. This is marked in the chart below as a green color dotted line.
Daily chart – FF
FF – Falling Wedge Pattern Breakout
#9 Air Lease Corp (NYSE: AL)
Sector: Industrials • Rental & Leasing Services
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 AL is if the stock closes above the immediate resistance level of $47.40. This is marked in the chart below as a green color dotted line.
Daily chart – AL
AL – Symmetrical Triangle Pattern Breakout
#10 Illinois Tool Works, Inc. (NYSE: ITW)
Sector: Industrials • Specialty Industrial Machinery
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 ITW is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $267.40. This is marked in the chart below as a green color dotted line.
Daily chart – ITW
ITW – Ascending Triangle Pattern
Happy Trading!
Trades of The Day Research Team
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