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 recent successful breakout trade is interactive entertainment player King Digital Entertainment (KING), which I featured in June 27's "5 Stocks Ready for Breakouts" at around $17.50 per share. I mentioned in that piece that shares of King Digital Entertainment were just starting to spike higher right off its 50-day moving average of $17.04 with decent upside volume. That spike was quickly pushing shares of KING within range of triggering a near-term breakout trade above a key downtrend line.
Guess what happened? Shares King Digital Entertainment triggered that breakout the same day as my article, and the stock never looked back, exploding higher to its new all-time high of $23.48 a share on July 2. That represents a massive of gain of well over 30% in just a few trading sessions for anyone who snapped up shares of KING in anticipation of that breakout. As you can see, trading breakouts that trigger with volume can produce monster moves in 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.