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 | Bread Financial Holdings, Inc. | NYSE: BFH | $37.01 | $39.80 | Falling Wedge Pattern Breakout |
| 2 | New York Community Bancorp, Inc. | NYSE: NYCB | $9.26 | $9.40 | Symmetrical Triangle Pattern Breakout |
| 3 | Pinterest, Inc. | NYSE: PINS | $24.90 | $26.40 | Ascending Triangle Pattern |
| 4 | Valvoline Inc. | NYSE: VVV | $29.30 | $29.40 | Falling Wedge Pattern Breakout |
| 5 | Intel Corporation | NASDAQ: INTC | $29.07 | $29.70 | Downtrend Channel |
| 6 | Verra Mobility Corporation | NASDAQ: VRRM | $17.25 | $17.40 | Symmetrical Triangle Pattern Breakout |
| 7 | Gilead Sciences, Inc. | NASDAQ: GILD | $79.27 | $79.50 | Uptrend Channel Breakout |
| 8 | Cohu, Inc. | NASDAQ: COHU | $33.66 | $34.30 | Symmetrical Triangle Pattern Breakout |
| 9 | Tenneco Inc. | NYSE: TEN | $19.65 | $19.90 | Ascending Triangle Pattern |
| 10 | PennyMac Financial Services, Inc. | NYSE: PFSI | $55.18 | $55.60 | Symmetrical Triangle 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 Bread Financial Holdings, Inc. (NYSE: BFH)
Sector: Financial | Credit Services
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 BFH is above the nearest resistance level of $39.80. This is marked in the chart below as a green color dotted line.
Daily chart – BFH
BFH – Falling Wedge Pattern Breakout
#2 New York Community Bancorp, Inc. (NYSE: NYCB)
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 NYCB is if the stock closes above the immediate resistance level of $9.40. This is marked in the chart below as a green color dotted line.
Daily chart – NYCB
NYCB – Symmetrical Triangle Pattern Breakout
#3 Pinterest, Inc. (NYSE: PINS)
Sector: Communication Services | Internet Content & Information
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 PINS is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $26.40. This is marked in the chart below as a green color dotted line.
Daily chart – PINS
PINS – Ascending Triangle Pattern
#4 Valvoline Inc. (NYSE: VVV)
Sector: Energy | Oil & Gas Refining & Marketing
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 VVV is above the nearest resistance level of $29.40. This is marked in the chart below as a green color dotted line.
Daily chart – VVV
VVV – Falling Wedge Pattern Breakout
#5 Intel Corporation (NASDAQ: INTC)
Sector: Technology | Semiconductors
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 INTC is if the stock breaks out of the downtrend channel and has a daily close above $29.70. This is marked in the chart below as a green color dotted line.
Daily chart – INTC
INTC – Downtrend Channel
#6 Verra Mobility Corporation (NASDAQ: VRRM)
Sector: Industrials | Security & Protection 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 VRRM is if the stock closes above the immediate resistance level of $17.40. This is marked in the chart below as a green color dotted line.
Daily chart – VRRM
VRRM – Symmetrical Triangle Pattern Breakout
#7 Gilead Sciences, Inc. (NASDAQ: GILD)
Sector: Healthcare | Drug Manufacturers – General
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 GILD is if the stock has a daily close above the near-term resistance level of $79.50. This is marked in the chart below as a green color dotted line.
Daily chart – GILD
GILD – Uptrend Channel Breakout
#8 Cohu, Inc. (NASDAQ: COHU)
Sector: Technology | Semiconductor Equipment & Materials
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 COHU is if the stock closes above the immediate resistance level of $34.30. This is marked in the chart below as a green color dotted line.
Daily chart – COHU
COHU – Symmetrical Triangle Pattern Breakout
#9 Tenneco Inc. (NYSE: TEN)
Sector: Consumer Cyclical | Auto Parts
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 TEN is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $19.90. This is marked in the chart below as a green color dotted line.
Daily chart – TEN
TEN – Ascending Triangle Pattern
#10 PennyMac Financial Services, Inc. (NYSE: PFSI)
Sector: Financial | Mortgage Finance
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 PFSI is if the stock closes above the immediate resistance level of $55.60. This is marked in the chart below as a green color dotted line.
Daily chart – PFSI
PFSI – Symmetrical Triangle Pattern Breakout
Happy Trading!
Trades of The Day Research Team
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Source: Trades of the Day