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 | Regal Rexnord Corp | NYSE: RRX | $107.02 | $108.50 | Downtrend Channel |
| 2 | IonQ Inc. | NYSE: IONQ | $28.90 | $29.50 | Symmetrical Triangle Pattern Breakout |
| 3 | ServiceNow Inc. | NYSE: NOW | $945.26 | $960.00 | Downtrend Channel Breakout |
| 4 | Core Scientific Inc. | NASDAQ: CORZ | $8.31 | $8.55 | Falling Wedge Pattern Breakout |
| 5 | Reddit Inc. | NYSE: RDDT | $118.10 | $121.00 | Downtrend Channel Breakout |
| 6 | SpringWorks Therapeutics Inc. | NASDAQ: SWTX | $44.72 | $46.00 | Symmetrical Triangle Pattern Breakout |
| 7 | Cleanspark Inc. | NASDAQ: CLSK | $9.01 | $9.30 | Falling Wedge Pattern Breakout |
| 8 | SoFi Technologies Inc. | NASDAQ: SOFI | $12.88 | $13.75 | Downtrend Channel Breakout |
| 9 | Flagstar Financial Inc. | NYSE: FLG | $11.73 | $12.30 | Symmetrical Triangle Pattern Breakout |
| 10 | Select Medical Holdings Corporation | NYSE: SEM | $17.35 | $17.90 | Falling Wedge 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 Regal Rexnord Corp (NYSE: RRX)
Sector: Industrials • Specialty Industrial Machinery
Reason: Formation of a Downtrend Channel
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 is currently forming a downtrend channel. The ideal buy level for RRX is if the stock breaks out of the downtrend channel and has a daily close above $108.50. This is marked in the chart below as a green color dotted line.
Daily chart – RRX
RRX – Downtrend Channel
#2 IonQ Inc. (NYSE: IONQ)
Sector: Technology • Computer Hardware
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 IONQ is if the stock closes above the immediate resistance level of $29.50. This is marked in the chart below as a green color dotted line.
Daily chart – IONQ
IONQ – Symmetrical Triangle Pattern Breakout
#3 ServiceNow Inc. (NYSE: NOW)
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 NOW is if the stock has a daily close above $960.00. This is marked in the chart below as a green color dotted line.
Daily chart – NOW
NOW – Downtrend Channel Breakout
#4 Core Scientific Inc. (NASDAQ: CORZ)
Sector: Technology • Software – Infrastructure
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 CORZ is above the nearest resistance level of $8.55. This is marked in the chart below as a green color dotted line.
Daily chart – CORZ
CORZ – Falling Wedge Pattern Breakout
#5 Reddit Inc. (NYSE: RDDT)
Sector: Communication Services • Internet Content & Information
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 RDDT is if the stock has a daily close above $121.00. This is marked in the chart below as a green color dotted line.
Daily chart – RDDT
RDDT – Downtrend Channel Breakout
#6 SpringWorks Therapeutics Inc. (NASDAQ: SWTX)
Sector: Healthcare • Biotechnology
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 SWTX is if the stock closes above the immediate resistance level of $46.00. This is marked in the chart below as a green color dotted line.
Daily chart – SWTX
SWTX – Symmetrical Triangle Pattern Breakout
#7 Cleanspark Inc. (NASDAQ: CLSK)
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 CLSK is above the nearest resistance level of $9.30. This is marked in the chart below as a green color dotted line.
Daily chart – CLSK
CLSK – Falling Wedge Pattern Breakout
#8 SoFi Technologies Inc. (NASDAQ: SOFI)
Sector: Financial • Credit 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 SOFI is if the stock has a daily close above $13.75. This is marked in the chart below as a green color dotted line.
Daily chart – SOFI
SOFI – Downtrend Channel Breakout
#9 Flagstar Financial Inc. (NYSE: FLG)
Sector: Financial • Banks – Regional
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 FLG is if the stock closes above the immediate resistance level of $12.30. This is marked in the chart below as a green color dotted line.
Daily chart – FLG
FLG – Symmetrical Triangle Pattern Breakout
#10 Select Medical Holdings Corporation (NYSE: SEM)
Sector: Healthcare • Medical Care Facilities
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 SEM is above the nearest resistance level of $17.90. This is marked in the chart below as a green color dotted line.
Daily chart – SEM
SEM – Falling Wedge Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day