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 bio therapeutic drugs player Northwest Biotherapeutics (NWBO), which I featured in Jan. 17's "5 Stocks Ready to Break Out" at $4.50 share. I mentioned in that piece that shares of NWBO had been uptrending with the stock consistently making higher lows and higher highs, which is bullish technical price action. That uptrend was starting to push shares of NWBO within range of triggering a big breakout trade above some key overhead resistance levels at $4.62 to $4.75 a share and then above $5 to $5.25 a share.
Guess what happened? Shares of NWBO started to flirt with those levels in last January and then the stock pulled back modestly to its recent low of $4.82 a share in early February. Shares of NBWO then geared up broke out again with strong upside volume flows and the stock tagged an intraday high today of $6.50 a share. That represents a monster gain of 40% in one month for anyone who bought this stock near $4.50 and anticipated the breakout. As you can see, trading breakouts can rack up huge profits in a very short timeframe when the trade works out.
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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.