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 recent successful breakout trade is medical application and equipment player Arrhythmia Research Technology (HRT), which I featured in May 9's 5 Stocks Ready for Breakouts at around $5.20 share. I mentioned in that piece that shares of Arrhythmia Research Technology were gapping up sharply higher back above its 50-day moving average with strong upside volume. That spike was quickly pushing shares of HRT within range of triggering a big breakout trade above some near-term overhead resistance levels at $5.30 to $5.48 a share.
Guess what happened? Shares of HRT didn't wait long to trigger that breakout, since the stock ripped higher above those key resistance levels on May 13 with above-average volume. Shares of HRT tag an intraday high on last Friday of $6.46 a share, which represents a sharp gain of 25% from my original article. Shares of HRT are starting to enter overbought territory, since its relative strength index reading is now 80. That said, the stock looks likely to re-test or possibly take out its 52-week high of $6.98 a share in the very near future.
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.