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 biotechnology player Codexis (CDXS), which I featured in July 28's "5 Stocks Ready for Breakouts" at around $1.95 per share. I mentioned in that piece that shares of Codexis were starting to uptrend again after the stock recently gapped up sharply higher from $1.38 to $2.65 with monster upside volume. That uptrend was quickly pushing shares of CDXS within range of triggering a big breakout trade above some key near-term overhead resistance levels at $1.98 to $2 a share.
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Guess what happened? Shares Codexis triggered that breakout on July 30 with strong upside volume flows. volume on that day registered 1.18 million shares, which is well above its three-month average action of 209,570 shares. Shares of CDXS soared and tagged an intraday high during that trading session of $2.20 a share. That represents a solid gain of around 20% for anyone who bought the stock near or under $2 a share in anticipation of that breakout. Shares of CDXS still look poised to move higher, so traders should now look for the stock to take out $2.20 a share with strong upside volume flows.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. Read More: 5 Breakout Stocks Under $10 Set to Soar With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels.