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 it's free to find new buyers and momentum players who can ultimately push the stock significantly higher.
One example of a successful breakout trade I flagged recently was biopharmaceutical stock La Jolla Pharmaceutical (LJPC), which I featured in Mar. 7's "5 Stocks Ready for Breakouts" at $9.10 share. I mentioned in that piece that shares of La Jolla Pharmaceutical had recently gapped sharply higher back above its 50-day moving average with heavy upside volume. That spike was starting to push shares of LJPC within range of triggering a big breakout trade above some key near-term overhead resistance levels at $9.75 to $10.25 a share.
Guess what happened? Shares of La Jolla Pharmaceutical started to take out those breakout levels with monster upside volume the following trading session. This stock exploded to the upside on March 11 with heavy upside volume, and the stock tagged an intraday high of $19.50 a share. That represents a gain of over 100% for anyone who played this breakout in just a few trading sessions. As you can see here, trading breakouts that trigger with strong upside volume flows and lead to huge profits in a very short timeframes.
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. What's great about breakout trading is that you focus on trend, price and volume. You don't 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, here's a look at five stocks that are setting up to break out and trade higher from current levels.