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 | Comcast Corporation | NASDAQ: CMCSA | $50.05 | $52.20 | Downtrend Channel Breakout |
| 2 | Lucid Group, Inc. | NASDAQ: LCID | $41.98 | $42.50 | Symmetrical Triangle Pattern Breakout |
| 3 | Discovery, Inc. | NASDAQ: DISCA | $30.06 | $35.40 | Downtrend Channel Breakout |
| 4 | Bank of America Corporation | NYSE: BAC | $49.18 | $49.60 | Uptrend Channel |
| 5 | Pinduoduo Inc. | NASDAQ: PDD | $55.90 | $71.80 | Falling Wedge Pattern |
| 6 | AT&T Inc. | NYSE: T | $26.29 | $26.80 | Downtrend Channel Breakout |
| 7 | Schlumberger Limited | NYSE: SLB | $35.03 | $35.20 | Symmetrical Triangle Pattern Breakout |
| 8 | Viatris Inc. | NASDAQ: VTRS | $14.74 | $15.10 | Downtrend Channel Breakout |
| 9 | Pilgrim’s Pride Corporation | NASDAQ: PPC | $28.48 | $565.00 | Flag Pattern Breakout |
| 10 | Citigroup Inc. | NYSE: C | $65.78 | $67.00 | 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 Comcast Corporation (NASDAQ: CMCSA)
Sector: Communication Services | Entertainment
Reason: Breakout From 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): Although the stock has broken out of the downtrend channel, the ideal buy level for CMCSA is if it has a daily close above the breakout level of the near-term resistance area, at around $52.20. This is marked in the chart below as a green color dotted line.
Daily chart – CMCSA
CMCSA – Downtrend Channel Breakout
#2 Lucid Group, Inc. (NASDAQ: LCID)
Sector: Consumer Cyclical | Auto Manufacturers
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 an 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 LCID is if the stock closes above the immediate resistance level of $42.50. This is marked in the chart below as a green color dotted line.
Daily chart – LCID
LCID – Symmetrical Triangle Pattern Breakout
#3 Discovery, Inc. (NASDAQ: DISCA)
Sector: Communication Services | Entertainment
Reason: Breakout From 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): Although the stock has broken out of the downtrend channel, the ideal buy level for DISCA is if it has a daily close above the breakout level of the near-term resistance area, at around $35.40. This is marked in the chart below as a green color dotted line.
Daily chart – DISCA
DISCA – Downtrend Channel Breakout
#4 Bank of America Corporation (NYSE: BAC)
Sector: Financial | Banks – Diversified
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 BAC is if the stock has a daily close above the breakout level of the uptrend channel, at around $49.60. This is marked in the chart below as a green color dotted line.
Daily chart – BAC
BAC – Uptrend Channel
#5 Pinduoduo Inc. (NASDAQ: PDD)
Sector: Consumer Cyclical | Internet Retail
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 PDD is if the stock breaks out of the falling wedge pattern as well as closes above the immediate resistance level of $71.80. This is marked in the chart below as a green color dotted line.
Daily chart – PDD
PDD – Falling Wedge Pattern
#6 AT&T Inc. (NYSE: T)
Sector: Communication Services | Telecom Services
Reason: Breakout From 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): Although the stock has broken out of the downtrend channel, the ideal buy level for T is if it has a daily close above the breakout level of the near-term resistance area, at around $26.80. This is marked in the chart below as a green color dotted line.
Daily chart – T
T – Downtrend Channel Breakout
#7 Schlumberger Limited (NYSE: SLB)
Sector: Energy | Oil & Gas Equipment & 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 an 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 SLB is if the stock closes above the immediate resistance level of $35.20. This is marked in the chart below as a green color dotted line.
Daily chart – SLB
SLB – Symmetrical Triangle Pattern Breakout
#8 Viatris Inc. (NASDAQ: VTRS)
Sector: Healthcare | Drug Manufacturers – Specialty & Generic
Reason: Breakout From 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): Although the stock has broken out of the downtrend channel, the ideal buy level for VTRS is if it has a daily close above the near-term resistance area, at around $15.10. This is marked in the chart below as a green color dotted line.
Daily chart – VTRS
VTRS – Downtrend Channel Breakout
#9 Pilgrim’s Pride Corporation (NASDAQ: PPC)
Sector: Consumer Defensive | Packaged Foods
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 PPC is above the near-term resistance level of $565.00. This is marked in the chart below as a green color dotted line.
Daily chart – PPC
PPC – Flag Pattern Breakout
#10 Citigroup Inc. (NYSE: C)
Sector: Financial | Banks – Diversified
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 ideal buy level for C is if the stock has a daily close above the breakout level of the downtrend channel and closes above the immediate resistance area, at around $67.00. This is marked in the chart below as a green color dotted line.
Daily chart – C
C – Downtrend Channel
Happy Trading!
Trades of The Day Research Team
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