MADISON, Wis. ( 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.
One example of a powerful breakout trade I flagged this year was biopharmaceutical player
), which I featured in Jan. 10's "
5 Under-$10 Stocks Primed to Rise in January
" at around $2.80 a share. I mentioned in that piece that PTIE was uptrending strong and the stock was consistently making higher lows and higher highs, which is bullish technical price action. That move was quickly pushing PTIE within range of triggering a breakout trade above some key overhead resistance levels at $2.89 to $3.05 a share.
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Guess what happened? Shares of PTIE continued to uptrend for the next couple of months, with the stock flirting with that breakout a few times and never violating its 50-day moving average. Then, in early March, PTIE finally triggered that breakout convincingly with strong upside volume flows. The stock hit a high of $3.79 a share and then subsequently sold off to its recent low of $2.80 a share. The stock didn't stay at $2.80 for long, going on to break out again above $3.33 to $3.79 a share, and it hit a recent high of $4.60 a share.
This stock now looks ready to break out again over $4.60. That breakout, if we get it, will result in PTIE getting into its previous gap down zone from 2011 that started near $7 a share. So traders should continue to watch PTIE for a high-volume move above $4.60 since the upside potential into that gap could be huge.
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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.
With that in mind, here's a look at
five stocks that are setting up to break out and trade higher from current levels
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