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 specialty financial services player Life Partners (LPHI), which I featured in Feb. 7's " 5 Stocks Under $10 Ready to Soar Higher" at around $3.11 a share. I mentioned in that piece that shares of LPHI had been trading inside of a consolidation pattern for the last two months and the stock was just starting to move within range of triggering a major breakout trade above the upper-end of that sideways pattern. That breakout was set to trigger once LPHI manage to take out some near-term overhead resistance levels at $2.90 to $3.16 a share with high volume.
Guess what happened? Shares of LPHI triggered that move on the following trading session with heavy upside volume. This stock has exploded higher since it took out those key resistance levels, with shares hitting a recent high of $4.02 a share. That's a big gain for anyone who bought the stock in anticipation of the move. Shares of LPHI could still be setting up for higher prices, if the stock can hold some near-term support levels at $3.80 to $3.70 a share and then once it takes out its recent high at $4.02 a share with high volume.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. >>5 Stocks Under $10 Set to Explode 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. >>4 Reasons to Buy Stocks in 2013