3 Stock Setups for the Second Half of 2025
As we head into the second half of 2025, here are three stocks that present strong technical setups with favorable risk/reward profiles. One is the largest market cap stock we're familiar with, which bodes well for the market in general. The second is an old tech giant that's making a comeback. The third is a beaten-down S&P 500 name that may be ready to rally.
Let's dive into these three stocks.
NVIDIA (NVDA) is Leading the Market
Nvidia (NVDA) shares have finally broken out and closed above $150, a level we've been closely watching. With price action above that resistance threshold, NVDA's stock price has room to run.
DeepSeek and tariff concerns seem to be in the rearview mirror. The fundamental positives are continued earnings growth, continued large tech cap-ex spend, and, more recently, Jensen Huang's unveiling of a cute robot he feels could be the next big thing.
Technically, this move has legs, and we have the patterns and history to show for it. The risk/reward set-up is now quite favorable. Let's break it down.
Over the last five years, there have been periods of consolidation (green boxes) and then significant breakouts to the upside. In all cases, shares became overbought according to the relative strength index (RSI). But overbought doesn't mean NVDA's stock price will reverse. During uptrends, overbought conditions can last for quite some time, as they did after the prior two significant breakouts.
With the official breakout above $150 and RSI again reading over 70, history suggests an extended rally is in the cards. A gain of 25–30% from current levels and a run to $200 is likely.
The downside risk is to the $150 level, from which shares just broke out. If this move is just a head fake, then use that level as a stop to limit your losses. This risk/reward set-up is why we believe this is one to own for the back half of 2025.
Cisco Systems (CSCO) Finds New Life
Old-timers like me may remember what a high flyer Cisco Systems (CSCO) once was. It's been a member of the Dow Jones Industrial Average ($INDU) since June 2009, and shares have struggled to sustain any upward momentum until lately.
Fundamentally, the company continued to grow through acquisition. Now, those deals are starting to help their bottom line, namely the $28 billion acquisition of Splunk that closed in 2024.
Technically — and that's what we care about on the StockCharts platform — we can have some fun.
Below is a 30-year chart going back to the dot-com boom. Cisco was one of Wall Street's darlings and climbed astronomically before falling from the skies. It has struggled to revisit those levels, but that could change soon.
Switching to a smaller time frame — a three-year weekly chart (see below) — we are seeing great set-ups as we head into the back half of 2025.
CSCO's stock price consolidated between $43 and $55 for 15 months and broke out in late 2024. Shares rallied and then pulled back to old resistance (now support) at $55 and began their climb back.
Now shares are breaking out again. An upside target of $82, the all-time high set back during the dot-com era, is within reach and may just get there by year-end. The risk/reward seems favorable and, given the run in tech and cyber stocks which CSCO represents, the momentum is there to reach those highs.
Generac's Power Play
Welcome to hurricane season! It lasts from June 1st to November 30. Generac (GNRC), a leader in home backup power, tends to perform well during weather extremes. It isn't always the primary catalyst for rallies over the long term in the stock, but it can spur short-term rallies.
Last week, as much of the country was in the middle of a heat wave, GNRC had the best week of gains since November 2024, rallying nearly 12%. The trend change seems to be underway. Shares are lower by -8.1% year-to-date, and there's room to run.
However, the charts are showing signs of life. Let's keep this one as simple as possible.
The stock broke its longer-term downtrend (red line)
Shares have made a consistent set of higher lows (green uptrend)
Shares recaptured their 50-day moving average
Shares consolidated in an ascending triangle and broke out
Shares tested and failed to recapture their 200-day moving average
Progress is being made. The trend has changed, there's something to reverse, and seasonal factors and reduced tariff concerns are a true tailwind.
Shares could easily pull back — a flag, if you will — to the $135 area, but should be a great entry point from a risk/reward perspective. Overall, shares are poised to continue reversing that longer-term downtrend, and could be a good addition to the portfolio for the end of 2025.
The Bottom Line
Each of these stocks offers a viable investment strategy with favorable risk-to-reward ratios. If you're going to enter a position, use clearly-defined stop levels to manage your risks.
