Skip to Content

5 Stock Charts Ripe for a Breakout

By Matt McCallFeb 23, 2019

The S&P 500 has kicked off 2019 on a strong note. It has put together a strong 20% rally off its December and only has another 5% to go before reaching the all-time high it set in September.

I believe the S&P will break into record territory in the near future. But before that occurs, I suspect we’ll see a handful of individual stock rally through resistance levels as well.

We are already starting to see this happen. It’s a great sign of things to come. But we can make a lot more money by spotting the breakouts before they occur as opposed to after. Today, I’d like to talk about five stocks that are right on the edge of breaking out.

1. Merck & Co. (MRK)

One of the largest pharmaceutical companies in the world is currently sitting just below an all-time high.

The stock fell with the broad market after notching a new record of $80.19 in early December, but since then it has been able to work its way back toward $80. The first few tries at resistance this week have failed, but I suspect it is only a matter of time until the breakout occurs.

Merck trades with a forward P/E ratio of 15.1 and boasts a solid dividend yield of 2.8%. Both of these are impressive numbers for a stock on the verge of rallying.

2. Oracle (ORCL)

Once a high-flying tech stock prior to the 2000 bubble, Oracle is now a much more mature company and has held on to its leadership role in the global software sector.

The stock has run into resistance at the $54 area several times since 2017. The most recent rally has been in impressive – ORCL is up more than 20% from its late December low – and the chart suggests we’ll see a breakout to a new all-time high in the near future.

3. Ericsson (ERIC)

This is another company that got caught up in the 2000 tech bubble. It rallied more than 14,000% from the 1980s to the top in 2000 before losing 99% of its value over the next two years. After a decade and a half of not doing much, ERIC is now one of the best-positioned companies to benefit from the transition to the 5G network.

This telecom equipment maker has been attempting to break out since late 2018, but it continues run into resistance near $9.50. There are two factors that tell me the stock could seal the deal move soon. First, ERIC has made higher lows following each failed attempt. That’s a positive sign from a technical perspective. It means buyers are paying more for this stock on every pullback.

The second factor is the investigation into China’s Huawei, the number one global supplier of telecom equipment. The United States has filed charges against Huawei, and if the company starts being banned in various countries it will be a major opportunity for competitors to take market share. Ericsson is one of two companies – the other being Nokia (NOK) – that stands to benefit the most.

4. Tractor Supply Company (TSCO)

This rural retailer of farming equipment appears to be nearing a major breakout. It has struggled to crack the century milestone since 2015. After taking a major hit between 2016 and 2017, the stock has now come back to within 3% of success.

Tractor Supply is close, and I suspect we could see new records above $100 before the end of the month. If it can break through the psychological level, look for an influx of investors and heavy buying to push the shares even higher.

5. Twilio (TWLO)

This leading software company is in the midst of an impressive short- and long-term rally, and it is now on the verge of a breakout above $120. This move would be the latest in a long line of breakouts to new highs in the last three months.

I expect TWLO will remain a leader in its industry for years to come. And as a high-flying tech company, I also expect breakouts will remain a recurring theme in its future.

Don't miss out on the incredible megatrends that are shaping today's market. Gain access to the most powerful market insights and stock advice from Matt McCall absolutely FREE. Join Today!