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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.
An example of a recent successful breakout trade is BlackBerry maker
Research In Motion(RIMM), which I featured in Nov. 01's "
5 Stocks Under $10 Set to Trade Higher in November." I mentioned in that piece that RIMM was finding some buying interest right above its 50-day moving average and it was starting to trigger a breakout trade above some near-term overhead resistance levels at $8.08 to $8.49 a share with decent upside volume flows. I said that if RIMM held that breakout, then the stock could ultimately hit $12 to $13 a share.
Guess what happened? Shares of RIMM sold off a few days later from over $9 to $8.14 a share, but the stock never breached its 50-day moving average or its first breakout level of $8.08 a share. Shares of RIMM remained in an uptrend and the stock went on to skyrocket towards today's high of $12.30 a share. That's a monster gain of 55% in just the month of November for shares RIMM. Had you been focusing on those breakout prices that I highlighted in the piece, then you could've capitalized big off the move.
Breakout candidates are something that I
tweet about on a daily basis. I frequently tweet out high-probability setups, breakout plays and stocks that are acting technically bullish. These are the stocks that often go on to make monster moves to the upside. What's great about breakout trading is that you focus on trend, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.
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.