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5 Stocks Setting Up to Break Out

WINDERMERE, Fla. (Stockpickr) -- U.S. stocks are advancing modestly higher this morning ahead of the Federal Reserve meeting that's scheduled for later today. Some market observes believe that we could get another round of quantitative easing, or QE3, but others feel that the Fed will do nothing more until we move into the new year.

Some traders are also getting long stocks today ahead of the much-anticipatedZynga (ZNGA) IPO (I wrote about it back in May); the stock is slated to start trading on Friday. A strong showing by Zynga could easily perused large money managers to chase some high-beta tech and social networking stocks that could move higher in front of the IPO.

>>5 Stocks Set to Soar off Bullish Earnings

At last check, the Dow Jones Industrial Average moving higher by over 57 points and the S&P 500 was up 6 points. The tech-heavy Nasdaq was trending higher by over 3 points.

There are still hopes among market players that equities will experience a year-end rally as hedge fund and mutual fund managers chase performance to boost returns. If we get that action, then a number of stocks are going to breakout and trend significantly higher. The top traders in the world know that markets are made up of thousands of stocks in different sectors. With so many moving parts, there's always some sector or stock that's acting strong and breaking out.

Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels, and hold above those breakout prices, then it can easily trend significantly higher.

Here's a look at several stocks setting up to break out and potentially trade higher from current levels.

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