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 technology player MobileIron (MOBL) , which I featured in Aug. 22's "5 Breakout Stocks Under $10 Set to Soar" at around $9.14 per share. I mentioned in that piece that shares of MobileIron recently formed a double bottom chart pattern at $8.20 to $8.30 a share. Following that bottom, shares of MOBL were starting to trend higher and move within range of triggering a big breakout trade above some key near-term overhead resistance at $9.60 a share.
Guess what happened? Shares of MobileIron triggered that breakout a few treading sessions later with strong upside volume flows. Volume on Aug. 25 registered 1.49 million shares, which is well above its three-month average action of 696,350 shares. Shares of MOBL continued to tend higher following that breakout, with this stock recently tagging a new all-time high of $12.96 a share. That represents a monster gain of right around 40% in just a few trading sessions for anyone who bought shares of MOBL around the time of my article. As you can see, when breakouts trigger with volume the gains can be large once a stock catches momentum and trends higher.
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.