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 alternative energy player Solazyme (SZYM) which I featured in Dec. 04's " 4 Under-$10 Stocks Soaring with Room to Grow." I mentioned in that piece that SZYM was bouncing higher off some near-term support at $7.05 a share with decent volume. That bounce was starting to push SZYM within range of triggering a near-term breakout trade once it managed to clear $7.75 with high volume.
Guess what happened? Shares of SZYM triggered that breakout a few trading sessions later with monster upside volume. This stock went on to run to its recent high of $9.90 a share, which was tagged on December 14. That's a big gain in a very short timeframe for anyone that took that trade. The best part about this trade is that volume showed up to confirm that large buyers were moving into the stock once it broke out. Volume isn't always necessary for a breakout trade, but it raises the probability of success when we get it.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. >>Outwit the S&P in 2013 With 5 Hated Stocks With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels.