5 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.

One recent example of a successful breakout trade that I flagged was biotechnology player Zalicus (ZLCS). I featured the stock in " 5 Stocks Under $10 Set to Soar" on July 26, when it was trading at around $1 per share. I mentioned that if ZLCS managed to hold some near-term support levels at 95 to 88 cents, and then take out some near-term overhead resistance levels at $1.09 to $1.10 a share with volume, then it could spike significantly higher.

Guess what happened? The stock never traded below 95 cents, and it went on to trigger that breakout over $1.09 to $1.10 a share with volume. The stock soared to $1.43 a share in just a few weeks. That entire move was accompanied by heavy volume, which is exactly what you want to see when a stock triggers a major breakout trade. It's very possible that ZLCS is far from down going higher, but now the stock will need to clear $1.43 to $1.62 a share soon with volume to keep the uptrend in place.

>>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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