Friday’s shot across the bow in bank stocks had bulls on the ropes heading into the weekend. But it turns out the caution was unnecessary. On Monday, small-cap stocks soared over 3% in intraday trading to signal the uptrend was saved, and the bull market was back on. The quick turnaround has me eyeing multiple breakout stocks, and today I’m sharing my favorites.
Rather than focus on a particular sector, I let the charts be my guide. The cleanest, highest-quality patterns made the cut regardless of their location. To make sure they have the wind at their back now, I sorted my watch list of liquid stocks by percentage change.
All of these sat near the top in early morning trading, suggesting buyers were swarming, and they were leading stocks today.
- Tesla (NASDAQ:TSLA)
- Freeport-McMoRan (NYSE:FCX)
- Newmont Mining (NYSE:NEM)
From a price perspective, you have choices between $1,000 and $11, so there should be something here for everyone. Let’s take a peek at the charts.
Breakout Stocks: Tesla (TSLA)
Tesla is maturing into a well-behaved, clean trending stock. It’s a beautiful metamorphosis for a company that had a reputation for wicked volatility. Traders love the consistency of its trend and lengthening track record of profit-giving patterns. Retracements are bought, and breakouts result in quick follow-through. And then there’s the improved reliability of the moving averages. The 20-day has provided support like a champ all the way up this year.
Heading into today, TSLA stock was building a high base just under record highs. Monday’s pop ushered the shares right into resistance, hinting that a breakout was imminent. This morning’s 4% rally is the breakout we’ve been waiting for. Bull call spreads provide a cheap and straightforward way to capitalize on further upside.
The Trade: Buy the Aug $1,050/$1,070 bull call spread for around $8.20.
Freeport-McMoRan shares have doubled off the March lows and were sporting a symmetrical triangle pattern into today’s session. Consolidation periods like this allow overbought stocks to digest gains and build bases for future upswings. Like Tesla, FCX has been consistently bouncing off its rising 20-day moving average for months. This is the type of history that gives buyers the confidence to buy future dips and chase breakouts.
FCX stock has a strong correlation with copper prices, so I suggest keeping an eye on the metal when trading FCX. Copper futures are breaking out this morning and boast a clear uptrend that has increased in momentum over the past month. I’d consider it a green light to pursue the FCX setup.
The cheapness of its share price makes Freeport an easy stock play. You could also sell covered calls if you wanted to make it more of a cash flow play. I like selling the Aug $13 calls for 53 cents.
Newmont Mining (NEM)
Gold could be headed for a banner year. The yellow metal is ramping to a 52-week high this morning and it’s lifting gold miners along with it. Newmont Mining has one of my favorite setups in the space and is the final candidate in my breakout stocks gallery. Since last month’s pullback, NEM stock has been in the process of building an inverted head-and-shoulders pattern.
Volume patterns have buttressed the bullish reversal with multiple accumulation days cropping up over the past two weeks. Over the past week, NEM has been basing just beneath the neckline and 50-day moving average. This morning’s 3% run is officially completing and confirming the turnaround.
What’s more, the stock now has a $7 window to fill before the next ceiling comes into play. That offers compelling potential upside.
The Trade: Buy the Aug $65/$70 bull call spread for around $1.30.