5 Biotech Stocks Poised for Breakouts

WINDERMERE, Fla. ( 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 that can ultimately push the stock significantly higher.

A great example of a successful breakout trade that I highlighted recently was AuthenTec ( AUTH). On Tuesday, I highlighted shares of AUTH in " 4 Stocks Under $10 Making Big Moves," because the stock was moving notably higher with above average volume. Shares of AUTH were also starting to take out some previous overhead resistance levels at $5.19 a share.

Guess what happened? Just this morning, news has hit the wires that Apple ( AAPL) has purchased AuthenTec for $350 million, or $8 a share in cash, which represents a 58% premium over Thursday's closing price. Traders didn't even have to wait long to get paid in spades off the breakout action in AUTH.

>>5 Stocks Under $10 Set to Soar

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.

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