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 flagged recently was IsoRay (ISR), which I highlighted in " 5 Stocks Under $10 Set to Soar" because the stock was starting to see an increase in upside volume and was holding a key trend line. Also, the stock was trending right near some key resistance levels, which, if taken out,would trigger a major breakout trade.
Guess what happened? The following day, shares of ISR skyrocketed to a high of $1.47 a share from a daily low of $1.11 a share and off the prior day's low of near $1.01 a share. That move was also confirmed by heavy upside volume with over 3.2 million shares traded. That's a ridiculous move of over 40% if you get into the trade the day my article published. Now, the stock ended up giving a lot of gains back the next day after ISR did a stock offering of $3.5 million. Regardless, savvy traders know to book gains off a move that big, so you can see this breakout was a major success.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.