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 who can ultimately push the stock significantly higher.
One example of a successful breakout trade I flagged recently was biopharmaceutical player Sarepta Therapeutics (SRPT), which I featured in Nov. 25's "5 Stocks Poised for Breakouts" at $15.60 share. I mentioned in that piece that shares of SRPT had gapped down sharply from $37.80 to under $12 a share with heavy downside volume. Following that gap down, shares of SRPT had started to rebound sharply and the stock was quickly moving within range of triggering a big breakout trade above its gap-down-day high at $16.70 a share.
Guess what happened? Shares of SRPT didn't wait long to trigger that breakout, since the stock took out that key overhead resistance level the following trading session. Since that breakout triggered, this stock has never looked back as SRPT has continued to uptrend consistently. Last December, SRPT hit an intraday high of $21.48 a share and then the stock pulled back to $17.50 a share. Even that pullback never took SRPT below its gap-down-day high of $16.70 a share. Shares of SRPT exploded higher on Thursday and hit an intraday high of $28.80 a share after the company released some drug data. That represents a ridiculous gain of over 60% from the time I wrote the article last November.
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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.