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.
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One example of a successful breakout trade I flagged recently was airline player
Gol Linhas Aereas Inteligentes
), which I featured in Aug. 30's "
5 Stocks Ready to Break Out
" at $3.77 a share. I mentioned in that piece that shares of GOL were uptrending strong for the last few months, with shares moving higher from $2.74 to $3.83 a share. Shares of GOL had recently formed a double bottom chart pattern right above its 50-day moving average at $3.57 to $3.55 a share. That move was quickly pushing shares of GOL within range of triggering a near-term breakout trade above some key overhead resistance levels at $3.83 to $4.14 a share.
Guess what happened? Shares of GOL didn't wait long to trigger that breakout since the stock cleared those overhead resistance levels the following week with strong upside volume. Shares of GOL have hit an intraday high today of $5 a share, which represents a gain of 30% from when I flagged this setup. I don't think this stock is done going higher since the current uptrend remains intact, and shares of GOL are starting to take out more resistance today at $4.93 a share. This stock could easily tag $5.50 to $6 in the coming weeks, if the uptrend continues.
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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.
>>5 Stocsk Under $10 Setting Up to Trade 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