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 | Church & Dwight Co., Inc. | NYSE: CHD | $83.07 | $85.00 | Downtrend Channel |
| 2 | CubeSmart | NYSE: CUBE | $41.82 | $42.00 | Symmetrical Triangle Pattern Breakout |
| 3 | Gogo Inc. | NASDAQ: GOGO | $15.87 | $16.10 | Downtrend Channel Breakout |
| 4 | Kanzhun Limited | NASDAQ: BZ | $19.54 | $19.80 | Falling Wedge Pattern |
| 5 | South Pacific Resources Ltd | NYSE: SPB | $66.68 | $67.20 | Symmetrical Triangle Pattern Breakout |
| 6 | JinkoSolar Holding Co., Ltd. | NYSE: JKS | $55.48 | $56.70 | Downtrend Channel Breakout |
| 7 | Full Truck Alliance Co. Ltd. | NYSE: YMM | $9.26 | $9.60 | Falling Wedge Pattern Breakout |
| 8 | Veris Residential, Inc. | NYSE: VRE | $16.23 | $16.30 | Downtrend Channel Breakout |
| 9 | Array Technologies, Inc. | NASDAQ: ARRY | $22.22 | $23.70 | Ascending Triangle Pattern |
| 10 | Samsara Inc. | NYSE: IOT | $11.90 | $12.40 | Downtrend Channel 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 Church & Dwight Co., Inc. (NYSE: CHD)
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 CHD is if the stock breaks out of the downtrend channel and has a daily close above $85.00. This is marked in the chart below as a green color dotted line.
Daily chart – CHD
CHD – Downtrend Channel
#2 CubeSmart (NYSE: CUBE)
Sector: Real Estate | REIT – Industrial
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 CUBE is if the stock closes above the immediate resistance level of $42.00. This is marked in the chart below as a green color dotted line.
Daily chart – CUBE
CUBE – Symmetrical Triangle Pattern Breakout
#3 Gogo Inc. (NASDAQ: GOGO)
Sector: Communication Services | Telecom 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 GOGO is if the stock has a daily close above $16.10. This is marked in the chart below as a green color dotted line.
Daily chart – GOGO
GOGO – Downtrend Channel Breakout
#4 Kanzhun Limited (NASDAQ: BZ)
Sector: Industrials | Staffing & Employment Services
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 BZ is if the stock breaks out of the falling wedge pattern, at a price of around $19.80. This is marked in the chart below as a green color dotted line.
Daily chart – BZ
BZ – Falling Wedge Pattern
#5 South Pacific Resources Ltd (NYSE: SPB)
Sector: Consumer Defensive | Household & Personal Products
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 SPB is if the stock closes above the immediate resistance level of $67.20. This is marked in the chart below as a green color dotted line.
Daily chart – SPB
SPB – Symmetrical Triangle Pattern Breakout
#6 JinkoSolar Holding Co., Ltd. (NYSE: JKS)
Sector: Technology | Solar
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 JKS is if the stock has a daily close above $56.70. This is marked in the chart below as a green color dotted line.
Daily chart – JKS
JKS – Downtrend Channel Breakout
#7 Full Truck Alliance Co. Ltd. (NYSE: YMM)
Sector: Technology | Software – Application
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 YMM is above the nearest resistance level of $9.60. This is marked in the chart below as a green color dotted line.
Daily chart – YMM
YMM – Falling Wedge Pattern Breakout
#8 Veris Residential, Inc. (NYSE: VRE)
Sector: Real Estate | REIT – Residential
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 VRE is if the stock has a daily close above $16.30. This is marked in the chart below as a green color dotted line.
Daily chart – VRE
VRE – Downtrend Channel Breakout
#9 Array Technologies, Inc. (NASDAQ: ARRY)
Sector: Technology | Solar
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 ARRY is if the stock breaks out of the ascending triangle pattern and has a daily close above the near-term resistance level of $23.70. This is marked in the chart below as a green color dotted line.
Daily chart – ARRY
ARRY – Ascending Triangle Pattern
#10 Samsara Inc. (NYSE: IOT)
Sector: Technology | Software – Infrastructure
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 IOT is if the stock has a daily close above $12.40. This is marked in the chart below as a green color dotted line.
Daily chart – IOT
IOT – Downtrend Channel Breakout
Happy Trading!
Trades of The Day Research Team
Where to Invest $99 [sponsor]Motley Fool Stock Advisor's average stock pick is up over 350%*, beating the market by an incredible 4-1 margin. Here’s what you get if you join up with us today: Two new stock recommendations each month. A short list of Best Buys Now. Stocks we feel present the most timely buying opportunity, so you know what to focus on today. There's so much more, including a membership-fee-back guarantee. New members can join today for only $99/year.
Source: Trades of the Day