5 Stocks Poised for Big Breakouts

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.

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.

ChannelAdvisor


One technology player that's starting to move within range of triggering a big breakout trade is ChannelAdvisor (ECOM) , which provides software-as-a-service solutions worldwide. This stock has been destroyed by the sellers so far in 2014, with shares off huge by 60%.

If you take a look at the chart for ChannelAdvisor, you'll notice that this stock recently gapped down sharply in early August from around $24 to $16.20 a share with heavy downside volume. Following that move, shares of ECOM have been trending sideways and consolidating, with the stock moving between $15.31 on the downside and close to $17.50 on the upside. Shares of ECOM are now starting to spike higher off its recent lows and it's starting to move within range of triggering a big breakout trade above the upper-end of its sideways trading chart pattern.

Traders should now look for long-biased trades in ECOM if it manages to break out above some near-term overhead resistance at $17 to $17.50 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 607,802 shares. If that breakout hits soon, then ECOM will set up to re-test or possibly take out its next major overhead resistance levels at close to $20 a share. Any high-volume move above $20 to its 50-day at $20.18 will then give ECOM a chance to re-fill some of its previous gap-down-day zone that started near $24 a share.

Traders can look to buy ECOM off weakness to anticipate that breakout and simply use a stop that sits right below its recent low of $15.31 a share. One can also buy ECOM off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

LDR Holding

A medical device player that's starting to move within range of triggering a big breakout trade is LDR Holding (LDRH) , which focuses on designing and commercializing various surgical technologies for the treatment of patients suffering from spine disorders in the U.S., France, and internationally. This stock is off to a decent start so far in 2014, with shares up notably by 17%.

If you take a glance at the chart for LDR Holding, you'll see that this stock has been uptrending over the last month and change, with shares moving higher from its low of $21.70 to its recent high of $28.41 a share. During that uptrend, shares of LDRH have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of LDRH within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in LDRH if it manages to break out above some key overhead resistance levels at $28.41 to $28.48 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 208,520 shares. If that breakout materializes soon, then LDRH will set up to re-test or possibly take out its next major overhead resistance levels at $34.50 to around $38 a share.

Traders can look to buy LDRH off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $25.84 or near more support at $24 a share. One could also buy LDRH off strength once it starts to push above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

SanDisk

Another data storage devices player that's starting to trend within range of triggering a major breakout trade is SanDisk (SNDK) , which designs, develops, manufactures, and markets data storage products that are used in various consumer electronics products. This stock is off to a red hot start in 2014, with shares up sharply by 40%.

If you take a glance at the chart for SanDisk, you'll notice that this stock has been uptrending over the last month and change, with shares moving higher from its low of $90.65 to its recent high of $99.43 a share. During that move, shares of SNDK have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of SNDK have just started to bounce higher right off its 50-day moving average of $97.43 a share. That move is quickly pushing shares of SNDK within range of triggering a major breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in SNDK if it manages to break out above some key overhead resistance levels at $99.43 to its gap-down-day high from July at $100 a share with high volume. Watch for a sustained move or close above those levels with volume that hits near or above its three-month average action 3.63 million shares. If that breakout materializes soon, then SNDK will set up to re-fill some of its previous gap-down-day zone from July that started at $108.42 a share.

Traders can look to buy SNDK off weakness to anticipate that breakout and simply use a stop that sits right around some near-term support at $94.68 a share. One can also buy SNDK off strength once it starts to move above those breakout levels share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Workday

Another technology player that's starting to trend within range of triggering a big breakout trade is Workday (WDAY) , which provides enterprise cloud applications for global human resources and finance in the U.S. and internationally. This stock is off to a decent start so far in 2014, with shares up notably by 8.3%.

If you take a glance at the chart for Workday, you'll see that this stock has been uptrending strong for the last month and change, with shares moving higher from its low of $76.85 to its recent high of $91.55 a share. During that uptrend, shares of WDAY have been making mostly higher lows and higher highs, which is bullish technical price action. That strong move to the upside has now pushed shares of WDAY within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in WDAY if it manages to break out above some key overhead resistance levels at $91.55 to $92.15 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average volume of 1.47 million shares. If that breakout kicks off soon, then WDAY will set up to re-test or possibly take out its next major overhead resistance levels at $96.49 to $105.48 a share, or possibly even $110 a share.

Traders can look to buy WDAY off weakness to anticipate that breakout and simply use a stop that sits around some key near-term support at $85.23 a share. One can also buy WDAY off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Dice Holdings

My final breakout trading prospect is staffing and outsourcing services player Dice Holdings (DHX) , which provides career Websites and career fairs for professional communities. This stock is off to a hot start so far in 2014, with shares up sharply by 20%.

If you look at the chart for Dice Holdings, you'll notice that this stock bounced notably higher on last Friday right off its 50-day moving average of $8.17 a share with monster upside volume. Volume on that trading session registered 4.11 million shares, which is well above its three-month average action of 453,069 shares. That high-volume bounce is starting to push shares of DHX within range of triggering a big breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in DHX if it manages to break out above some near-term overhead resistance levels at around $9 to its 52-week high at $9.30 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 453,069 shares. If that breakout materializes soon, then DHX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $10.50 to $11 a share, or even $12 to $13 a share.

Traders can look to buy DHX off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $8.17 to $8.15 a share. One can also buy DHX off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

 

 

 

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned. Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

More from Investing

Did Trump Just Torpedo the Stock Market Again?

Did Trump Just Torpedo the Stock Market Again?

Lowe's Q1 Miss Emerges as Home Depot Veteran Arrives

Lowe's Q1 Miss Emerges as Home Depot Veteran Arrives

Stocks Move Lower on Trade Fears and 4 Other Stories You Must Know Wednesday

Stocks Move Lower on Trade Fears and 4 Other Stories You Must Know Wednesday

9 Stocks Goldman Sachs Thinks Will Blow Wall Street's Performance Away in 2019

9 Stocks Goldman Sachs Thinks Will Blow Wall Street's Performance Away in 2019

Adobe-Magento Deal Highlights Escalating Cloud Wars

Adobe-Magento Deal Highlights Escalating Cloud Wars