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TheStreet Open House

5 Stocks Setting Up to Break Out

Stock quotes in this article: RAVN, LNCR, MENT, SCSS, CPRX

WINDERMERE, Fla. ( Stockpickr) -- Stocks are soaring today after investors cheered some better-than-expected U.S. housing numbers and uplifting economic news out of the troubled eurozone.

At last check, the Dow Jones Industrial Average was soaring by a whopping 280 points and the S&P 500 was up over 30 points. The tech-heavy Nasdaq was spiking higher by over 70 points.

The Commerce Department released better-than-expected housing starts in November that showed a 9.3% jump to 685,000, up from the revised October estimate of 627,000 and better than the Wall Street forecast of 630,000 from economists surveyed by Thomson Reuters.

>>5 High-Yield Stocks That Could Soar

News out of Europe today also boosted stock prices after Germany said its business sentiment in December upticked to 107.2 points, which was an improvement from the last two months that saw very little change. Spain also added to the bullish news flow after a 5.6 billion-euro Spanish short-term debt auction went off without a hitch.

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. If today's action is the start of a much bigger market rally, then we're going to see tons of stocks in different sectors setup to breakout.

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.

With that in mind, here's a look at a number of stocks that are setting up to break out and potentially trade higher from current levels.

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