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 its free to find new buyers and momentum players that can ultimately push the stock significantly higher.
One example of a successful breakout trade I flagged recently was technology player Himax Technologies (HIMX), which I featured in Dec. 13s "5 Stocks Ready to Break Out" at $10.90 share. I mentioned in that piece that shares of HIMX were uptrending strong over the last month and change, with shares moving higher from its low of $8.13 to its recent high of $11.45 a share. During that move, shares of HIMX were consistently making higher lows and higher highs, which is bullish technical price action. That move was starting to push shares of HIMX within range of triggering a major breakout trade above some near-term overhead resistance levels at $11.45 to $11.49 a share.
Guess what happened? Shares of HIMX didn't wait long to trigger that move, since the stock took out those key overhead resistance levels on Dec. 16 with strong upside volume. Volume on that day registered 19.90 million shares, which is well above its three-month average action of 8.39 million shares. This stock has continued to uptrend and soar higher since breaking out, with the stock tagging an intraday high on Friday of $13.14 a share. That represents a solid gain of just over 20% from the time I wrote the article. This breakout has now pushed shares of HIMX into new all-time-high territory, which is bullish technical price action. I don't think the run higher is even close to being over for HIMX, and this stock has a great chance to tag $15 or even $17 in the near future.
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. Whats great about breakout trading is that you focus on trend, price and volume. You dont 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, heres a look at five stocks that are setting up to break out and trade higher from current levels.