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 and drugs player Rosetta Genomics ( ROSG). In " 5 Stocks Under $10 Set to Soar" on Aug. 9, I mentioned that ROSG was nearing some major previous support levels at $4 to $3.75 a share, and that the stock was extremely oversold. I said that ROSG was poised for a monster bounce if the stock held those levels, and if big upside volume started to flow into the name.

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Now, technically, I didn't mention any breakout levels in that article, since none had developed at that time with the stock trending near those previous support levels. That said, I did tweet out continued commentary on ROSG as the trade setup, and then the stock went on to trigger a major breakout.

Shares of ROSG exploded higher on Wednesday by around 40% as it triggered a major breakout trade above a number of key overhead resistance levels at $4.85 to $5.23 a share with massive volume. As I write this piece, ROSG is up another 7% today as the stock continues to advance above its 200-day moving average of $6.10 a share. If this uptrend continues for ROSG, then this stock will setup to trigger another breakout trade above its 50-day moving average of $8.65 a share.

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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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5 Stocks Poised for Breakouts