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 | Kinross Gold Corp. | NYSE: KGC | $37.16 | $37.80 | Uptrend Channel |
| 2 | Netflix Inc. | NASDAQ: NFLX | $86.12 | $89.60 | Falling Wedge Pattern |
| 3 | T1 Energy Inc. | NYSE: TE | $8.50 | $9.00 | Uptrend Channel |
| 4 | Life360 Inc. | NASDAQ: LIF | $68.10 | $71.80 | Downtrend Channel Breakout |
| 5 | Zoom Communications Inc. | NASDAQ: ZM | $85.78 | $86.40 | Symmetrical Triangle Pattern |
| 6 | International Paper Co | NYSE: IP | $43.04 | $44.00 | Downtrend Channel |
| 7 | Hycroft Mining Holding Corporation | NASDAQ: HYMC | $50.65 | $51.60 | Uptrend Channel Breakout |
| 8 | ServiceNow Inc. | NYSE: NOW | $133.11 | $137.60 | Falling Wedge Pattern |
| 9 | Sibanye Stillwater Limited ADR | NYSE: SBSW | $19.45 | $19.70 | Uptrend Channel Breakout |
| 10 | Kimberly-Clark Corp. | NASDAQ: KMB | $102.23 | $103.00 | 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 Kinross Gold Corp. (NYSE: KGC)
Sector: Basic Materials • Gold
Reason: Formation of an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for KGC is if the stock breaks out of the uptrend channel and has a daily close above $37.80. This is marked in the chart below as a green color dotted line.
Daily chart – KGC
KGC – Uptrend Channel
#2 Netflix Inc. (NASDAQ: NFLX)
Sector: Communication Services • Entertainment
Reason: Formation of a Falling Wedge Pattern
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 ideal buy level for NFLX is if the stock breaks out of the falling wedge pattern, at a price of around $89.60. This is marked in the chart below as a green color dotted line.
Daily chart – NFLX
NFLX – Falling Wedge Pattern
#3 T1 Energy Inc. (NYSE: TE)
Sector: Industrials • Electrical Equipment & Parts
Reason: Formation of an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The ideal buy level for TE is if the stock breaks out of the uptrend channel and has a daily close above $9.00. This is marked in the chart below as a green color dotted line.
Daily chart – TE
TE – Uptrend Channel
#4 Life360 Inc. (NASDAQ: LIF)
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 LIF is if the stock has a daily close above $71.80. This is marked in the chart below as a green color dotted line.
Daily chart – LIF
LIF – Downtrend Channel Breakout
#5 Zoom Communications Inc. (NASDAQ: ZM)
Sector: Technology • Software – Application
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 ZM is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $86.40. This is marked in the chart below as a green color dotted line.
Daily chart – ZM
ZM – Symmetrical Triangle Pattern
#6 International Paper Co (NYSE: IP)
Sector: Consumer Cyclical • Packaging & Containers
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 IP is if the stock breaks out of the downtrend channel and has a daily close above $44.00. This is marked in the chart below as a green color dotted line.
Daily chart – IP
IP – Downtrend Channel
#7 Hycroft Mining Holding Corporation (NASDAQ: HYMC)
Sector: Basic Materials • Gold
Reason: Breakout From an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The stock has currently broken out of the uptrend channel. However, the ideal buy level for HYMC is if the stock has a daily close above the near-term resistance level of $51.60. This is marked in the chart below as a green color dotted line.
Daily chart – HYMC
HYMC – Uptrend Channel Breakout
#8 ServiceNow Inc. (NYSE: NOW)
Sector: Technology • Software – Application
Reason: Formation of a Falling Wedge Pattern
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 ideal buy level for NOW is if the stock breaks out of the falling wedge pattern, at a price of around $137.60. This is marked in the chart below as a green color dotted line.
Daily chart – NOW
NOW – Falling Wedge Pattern
#9 Sibanye Stillwater Limited ADR (NYSE: SBSW)
Sector: Basic Materials • Other Precious Metals & Mining
Reason: Breakout From an Uptrend Channel
An uptrend channel or an ascending channel is the price action contained between upward sloping parallel lines. It is formed by a lower trend line that connects the swing lows, and an upper channel line that joins the swing highs. A stock usually trades between the two rails of the uptrend channel before finally breaking out from the upper rail.
Buy Level(s): The stock has currently broken out of the uptrend channel. However, the ideal buy level for SBSW is if the stock has a daily close above the near-term resistance level of $19.70. This is marked in the chart below as a green color dotted line.
Daily chart – SBSW
SBSW – Uptrend Channel Breakout
#10 Kimberly-Clark Corp. (NASDAQ: KMB)
Sector: Consumer Defensive • Household & Personal Products
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 KMB is if the stock breaks out of the downtrend channel and has a daily close above $103.00. This is marked in the chart below as a green color dotted line.
Daily chart – KMB
KMB – Downtrend Channel
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day
