By Trades Of The Day Research Team, Trades Of The Day, 2024-06-17
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 | Hasbro, Inc. | NASDAQ: HAS | $61.50 | $62.50 | Flag Pattern Breakout |
| 2 | Skyworks Solutions, Inc. | NASDAQ: SWKS | $104.37 | $106.50 | Symmetrical Triangle Pattern |
| 3 | Ollies Bargain Outlet Holdings Inc. | NASDAQ: OLLI | $87.71 | $89.10 | Breakout From Consolidation Area |
| 4 | Terns Pharmaceuticals Inc. | NASDAQ: TERN | $8.20 | $8.30 | Symmetrical Triangle Pattern Breakout |
| 5 | Shopify Inc. | NYSE: SHOP | $67.66 | $71.00 | Downtrend Channel |
| 6 | Aerovate Therapeutics Inc. | NASDAQ: AVTE | $24.62 | $25.10 | Symmetrical Triangle Pattern Breakout |
| 7 | Netflix Inc. | NASDAQ: NFLX | $669.39 | $673.00 | Ascending Triangle Pattern Breakout |
| 8 | Adobe Inc. | NASDAQ: ADBE | $525.30 | $541.50 | Falling Wedge Pattern Breakout |
| 9 | Bitdeer Technologies Holding Co. | NASDAQ: BTDR | $9.95 | $10.00 | Symmetrical Triangle Pattern Breakout |
| 10 | Grindr Inc. | NYSE: GRND | $10.15 | $10.60 | Flag Pattern |
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 Hasbro, Inc. (NASDAQ: HAS)
Sector: Consumer Cyclical • Leisure
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 HAS is above the near-term resistance level of $62.50. This is marked in the chart below as a green color dotted line.
Daily chart – HAS
HAS – Flag Pattern Breakout
#2 Skyworks Solutions, Inc. (NASDAQ: SWKS)
Sector: Technology • Semiconductors
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 SWKS is if the stock has a daily close above the breakout level of the symmetrical triangle pattern, at around $106.50. This is marked in the chart below as a green color dotted line.
Daily chart – SWKS
SWKS – Symmetrical Triangle Pattern
#3 Ollies Bargain Outlet Holdings Inc. (NASDAQ: OLLI)
Sector: Consumer Defensive • Discount Stores
Reason: Breakout From a Consolidation Area in the Daily Chart
A Consolidation Area is a price action contained between two parallel lines. It is formed by a lower line that connects the lows, and an upper line that joins the highs. A stock usually trades between the two lines of the consolidation area before finally breaking out from the upper rail.
Buy Level(s): Although the stock has currently broken out of a consolidation area, the ideal buy level for OLLI is above the near-term resistance area, which translates to a price of around $89.10. This is marked in the chart below as a green color dotted line.
Daily chart – OLLI
Read the rest here.
