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5 Stocks Ready for Breakouts

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 application software player 2U (TWOU), which I featured in July 28's "5 Stocks Ready for Breakouts" at around $14.37 per share. I mentioned in that piece that shares of 2U recently formed a major bottoming chart pattern at around $13 a share. Shares of TWOU were starting to spike higher off that support level and it was beginning to move within range of triggering a near-term breakout trade above some key overhead resistance levels at $14.43 to $14.78 a share.

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Guess what happened? Shares 2U triggered that breakout on August 7th with strong upside volume flows. Volume on that day registered 703,000 shares, which is well above its three-month average volume of 193,452 shares. Shares of TWOU tagged an intraday high on August 8th of $17.17 a share, which represents a solid gain of right around 20%. Shares of TWOU now look ready to trend significantly higher, if this stock can manage to take out its all-time high at $17.58 a share with high volume.

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.

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With that in mind, here's a look at five stocks that are setting up to break out and trade higher from current levels.

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DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%