WINDERMERE, Fla. (Stockpickr) -- U.S. stocks are now trading at levels we haven't seen in over two years.Since the Dow Jones Industrial Average broke out above some tough past resistance at 11,258, it has done nothing but trend higher and is now hitting fresh two-year highs. If this trend continues, the Dow will be challenging the psychologically important level of 12,000 in no time. The S&P 500 is also trading at levels not seen in two years. Ever since that index broke above 1,219, it has done nothing but trend higher toward its current level of around 1,284. It will be a major psychological advantage if the S&P 500 can manage to trade above 1,300. Things are no different for the Nasdaq, which is also trading at fresh two-year highs. This tech-heavy index has also been on a tear ever since it broke out above 2,535. Traders should now watch for the Nasdaq to hit the very psychological important level of 3,000. If all of these indices can manage to hit those key psychological levels, it will be a major win for the bulls. Ss the indices make their push toward those levels, stocks that are already trending with the market are likely to also head much higher. This is why traders should continue to monitor the markets for stocks that are breaking out, which can provide big profit opportunities if the market continues to show strength. Related: Technical Setups for the Week Trading breakouts is not a new game on Wall Street. This strategy has been pioneered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. A breakout occurs when a stock makes a move through a significant level of support or resistance, which is usually followed by heavy volume and increased volatility. Wall Street players love to see an upside breakout because it demonstrates strength in the underlying asset as the price breaks above a level of previous resistance. An upside breakout can also take a stock to new highs, which will generate a lot of interest as the stock shows up on sophisticated software that scans for this type of action. Here's a look at a number of solid breakout stock candidates that could have big upside potential from current levels.
Twitter and become a fan on Facebook. At the time of publication, author had no positions in stocks mentioned. Roberto Pedone, based out of Windermere, Fla., is an independent trader who focuses on stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.