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5 Stocks Poised for Breakouts

Stocks in this article: TEAROPXAACORTTWOSPWRMED

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.

An example of a successful recent breakout trade is TearLabs ( TEAR), which I featured in May 23's " 5 Stocks Under $10 Set to Soar" at around $10 a share. I mentioned then that shares of TEAR had been in a beautiful uptrend for the last five months, with the stock soaring higher from its low of $3.71 to a recent high of $10.25 a share. That uptrend was quickly pushing shares of TEAR within range of triggering a major breakout trade above its 52-week high at $10.25 a share.

>>5 Stocks Under $10 Set to Soar

Guess what happened? Shares of TEAR triggered that breakout on May 28, and the stock hit an intraday high of $10.73 a share. This stock briefly pulled back after breaking out to $9.58 a share, but that pullback never violated some key near-term support levels I highlighted in my article. Then TEAR resumed its uptrend again and broke out on June 3 with monster upside volume. This stock went on to hit a recent high of $12.97 a share, which represents a big gain of well over 20% for anyone who entered this trade.

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 Insiders Love Right Now

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.

>>Beat the S&P With 5 Stocks Everyone Else Hates

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