Trading breakout stocks is one of the most popular methods used by stock traders as the process of identifying a stock breakout can be simpler than some of the other more complex strategies. In short, the goal is to identify a precise level, or a region, and capitalise on a ‘break' (or a move outside) of that area.Â
If the price falls below the level, it may be a good time to offload or short the stock, but it could provide an excellent opportunity to get long and benefit from some upward momentum if it breaks above.
Breakout Stocks We Are Watching Now and into 2025
Some stocks entering breakout territory will be moving up into uncharted territory when setting all-time-highs, but for most, a break can occur when a company moves outside of some solid support or resistance territories. In these cases, the next level of support or resistance from prior moves would be your next chart lines to plot and watch, along with psychological levels that can occur at round numbers.
Tesla Inc. (TSLA)
Tesla's stock is undoubtedly in the midst of a breakout, having hit new all-time-highs after a huge run up that has seen the stock almost double since the election. TSLA is up at record highs of $428.57 in the pre-market on 12th December, and in uncharted territory could react to psychological levels, or have a period of price discovery. Analysts are also currently buoyed by the proximity of Elon Musk to incoming President Trump, and by positive outlooks on its advancements in self-driving technology and robotics.
The stock exhibits strong bullish momentum, confirmed by an RSI reading almost at 80 on the daily, indicating overbought conditions but also strong investor interest. This is one that has been able to sustain technically overbought periods in the past.
We can expect to see some support at the psychological level of $400 where potential retracements may find buying interest, with the previous high around $414 also likely to offer some support. Upside targets are absent at this time, with a period of price discovery underway.
Alphabet (GOOGL)
Alphabet's stock as another major name that has recently surged to a new all-time-high. Driven by optimism surrounding its new quantum computing chip, Willow the stock has broken above $195 having earlier had a period of rebuilding after a drop from July's high. This advancement suggests a potential continuation of the upward trend. Technically, the stock has broken out from a symmetrical triangle pattern, with the Relative Strength Index (RSI) now above 75 indicating bullish momentum and overbought territory.
Support levels are around $180, $165, and $150, with a potentially psychological level at $200 looming on the horizon. As the stock is up at all-time-highs, we will have to wait and see how GOOGL reacts to upcoming levels, and with a YTD gain above 40% already in the bag.
GE Vernova (GEV)
GE Vernova's stock (GEV) has surged following an investor update projecting long-term sales of $45 billion by 2028. With the stock having recently been spun out early this year, there are not a huge amount of technical points you can consider over the long-term. After a huge run up in the stock price, with more than 160% in gains since March, GEV has been finding strong resistance at $150.
The company also announced a 25-cent quarterly dividend and a $6 billion stock buyback program that has helped boost sentiment, and if the stock can break $150, we will be again entering new territory.
YOUR CAPITAL IS AT RISK
What is breakout trading?Â
Breakout trading is trading a stock that trades outside of a defined support/resistance or range. If a stock breaks a defined level, it usually indicates that the price will continue in the direction of the break.
Breakouts that occur on high volume provide more significant momentum and indicate that price is more likely going to trend in that direction.
One thing to be aware of is that not all traders will use the same support and resistance levels, and so a breakout on low momentum can indicate that the move has less chance of success.
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