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 solar energy player SolarCity (SCTY), which I featured in June 13's "5 Stocks Poised for Breakouts" at around $51 per share. I mentioned in that piece that shares of SolarCity had recently formed a double bottom chart pattern at $45.79 to $46.11 a share. Following that bottom, shares of SCTY were starting to uptrend and approach a big breakout trade above some key near-term overhead resistance levels from $53.31 to $56.77 a share.
Guess what happened? Shares Solar City started to trigger that breakout on June 16th and 17th with strong upside volume flows. Volume on those days registered 5.62 and 24.13 million shares, which is well above its three-month average volume of 5.04 million shares. Shares of SCTY recently tagged a high of $79.40 a share, which represents a monster gain of well over 50% in just a few months. As you can see, when a stock breaks out with big upside volume flows you can capture huge gains very quickly.
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.