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 health care player Oculus Innovative Sciences (OCLS), which I featured in Mar. 14's "5 Stocks Poised for Breakouts" at $4.09 share. I mentioned in that piece that shares of Oculus Innovative Sciences had been uptrending over the last month and change, with shares moving higher from a low of $2.92 to a recent high of $4.35 a share. That uptrend was starting to push shares of OCLS within range of triggering a major breakout trade above some key overhead resistance levels at $4.35 to $4.67 a share.
Guess what happened? Shares of Oculus Innovative Sciences started to challenge the first tier of those breakout levels on the same day that I wrote my article. This stock then exploded to the upside the following two trading sessions with massive upside volume blasting above all key near-term overhead resistance levels. This stock tagged an intraday high of $5.99 a share on March 18, which represents a monster gain of over 40% in just a few trading sessions. As you can see, when a stock breaks out with strong upside volume, it can quickly make an explosive move higher.
Shares of OCLS might not be done going higher either, so traders should now watch for a high-volume move above that recent of $5.99 a share to signal that this stock could be setting up to re-test or possibly take out its 52-week high at $7.21 a share.
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.