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 great example of a successful breakout trade that I highlighted recently was in Patriot Coal (PCX). On last Wednesday, in "my 8 Stocks Skyrocketing Higher," I flagged shares of PCX at $1.23 because the stock was ripping to the upside off of oversold conditions. I mentioned how the next breakout trade for PCX would trigger once it took out some near-term overhead resistance at $1.40 and then $1.60 a share with high volume.
Guess what happened? Shares of Patriot Coal went on to trigger that move, and that move came with massive upside volume. Shares of PCX have hit an intraday high today of $2.47 a share, and the stock is now quickly approaching its 50-day moving average of $3 a share. As you can see, trading something as simple as a high-volume breakout can lead to monster gains in a very short timeframe. It took PCX only five trading sessions to register gains of over 80%.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. >>ACTIVE STOCK TRADERS: Check out Stockpickr's special offer for Real Money, headlined by Jim Cramer, now! With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels.