NEW YORK ( TheStreet) -- Trading stocks that trigger major breakouts can lead to massive profits. Once a stock trends to a new high, or takes out a prior overhead resistance point, then it's free to find new buyers and momentum players that can ultimately push the stock significantly higher.
A perfect example of a successful breakout recently was Digital Generation (DGIT). Last Wednesday, I noticed that this stock was trending up strong with above average volume. In my 4 stocks under $10 making big moves article, I flagged the stock for its strong action and highlighted the key price points that would trigger a near-term breakout trade.
>>Also see: 7 Stocks Ripping Higher on Spiked Volume
Guess what happened? Shares of Digital Generation triggered that breakout five days later once the stock took out some near-term overhead resistance at around $10 a share. The stock subsequently skyrocketed to high of $13.20 a share. That's a 30% return in just a few days, all because the stock broke out with heavy volume.>>ACTIVE STOCK TRADERS: Check out Stockpickr's special offer for Real Money, headlined by Jim Cramer, now! 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 five stocks that are setting up to break out and trade higher from current levels.