Delafield, 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.
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.Youku Tudou One name that's starting to move within range of triggering a near-term breakout trade is Youku Tudou (YOKU), which is an Internet television company in China. This stock is off to a decent start in 2013, with shares up just over 19%. If you take a look at the chart for Youku Tudou, you'll notice that this stock is spiking higher today right above its 50-day moving average of $19.80 with heavy upside volume. At last check, over 2.44 million shares have traded for YOKU, which is well above its three-month average volume of 1.85 million shares. This stock has also started to break out above some near-term overhead resistance levels at $20.58 to $20.95 a share. That move is quickly pushing the stock within range of triggering another major breakout trade. Traders should now look for long-biased trades in YOKU if it manages to break out above some near-term overhead resistance levels at $21.79 to $22.60 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 1.85 million shares. If that breakout triggers soon, then YOKU will set up to re-test or possibly take out its 52-week high at $25.24 a share. Any high-volume move above that level will then give YOKU a chance to tag $30 to $33 a share.
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