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TheStreet Open House

5 Stocks Setting Up to Break Out

Stocks in this article: LMOSACHNCIGXCRAYBRLIOSIR

WINDERMERE, Fla. ( Stockpickr) -- 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 powerful breakout recently was Osiris Therapeutics (OSIR). On May 17, I noticed that this stock was starting to move to the upside with strong volume. In my 7 stocks under $10 making big moves article, I highlighted this stock for its bullish price action, and I mentioned the key levels that would trigger a major breakout trade.

>>QE3 Isn't Coming This Summer -- Buy These 4 Stocks Instead

Guess what happened? Shares of Osiris Therapeutics triggered that breakout just a few days later, and the stock exploded from around $5.50 to its current price of over $8.50 a share. That is a massive move higher in a very short timeframe. Momentum traders were watching the same levels that I was, so once OSIR took out its overhead resistance at $5.50 the stock just exploded to the upside.

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.

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

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