5 Stocks Ready to Break Out and Soar Higher

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.

Noodles & Company

One casual restaurant player that's moving very quickly within range of triggering a big breakout trade is Noodles & Company (NDLS) , which offers various cooked-to-order dishes, including noodles and pasta, soups, salads, sandwiches and appetizers. This stock has been hit hard by the bears so far in 2014, with shares off sharply by 38%.

If you take a look at the chart for Noodles & Company, you'll notice that this stock has been uptrending over the last month and change, with shares moving higher from its low of $17.15 to its intraday high on Friday of $22.25 a share. During that uptrend, shares of NDLS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of NDLS within range of triggering a big breakout trade above some key near-term overhead resistance.

Traders should now look for long-biased trades in NDLS if it manages to break out above some key near-term overhead resistance at $22.58 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 551,765 shares. If that breakout hits soon, then NDLS will set up to re-fill some of its previous gap-down-day zone from August that started at $26 a share. If that gap gets filled with volume, then NDLS could even tag $28 to $30 a share.

Traders can look to buy NDLS off weakness to anticipate that breakout and simply use a stop that sits right around its 50-day moving average of $20.12 a share. One can also buy NDLS off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Regado Biosciences

A biopharmaceutical player that's starting to trend within range of triggering a big breakout trade is Regado Biosciences (RGDO) , which focuses on the discovery and development of antithrombotic drug systems for acute and sub-acute cardiovascular and other indications This stock has been destroyed by the sellers so far in 2014, with shares down huge by 76%.

If you take a glance at the chart for Regado Biosciences, you'll see that this stock has formed a major bottoming chart pattern over the last month, with shares finding buying interest at 96 cents, $1 a share and 97 cents per share. Following that bottom, shares of RGCO have started to spike higher off those support levels and are beginning to move 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 RGDO if it manages to break out above some near-term overhead resistance levels at $1.13 to $1.16 a share and then once it clears more key resistance levels at $1.20 to $1.25 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 771,152 shares. If that breakout develops soon, then RGDO will set up to re-test or possibly take out its next major overhead resistance levels at its gap-down-day high from August at $1.44 a share to its 50-day moving average of $1.46 a share. Any high-volume move above those levels will then give RGDO a chance to re-fill some of its previous gap-down-day zone that started around $2.80 a share.

Traders can look to buy RGDO off weakness to anticipate that breakout and simply use a stop that sits right around $1 a share or near its 52-week low of 96 cents per share. One could also buy RGDO 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.

Voxeljet

Another technology player that's starting to trend within range of triggering a near-term breakout trade is Voxeljet (VJET) , which provides 3D printers and on-demand parts services to industrial and commercial customers. This stock has been slammed lower by the bears so far in 2014, with shares down sharply by 64%.

If you take a glance at the chart for Voxeljet AG, you'll notice that this stock has been downtrending badly for the last three months and change, with shares moving lower from its high of $27.41 to its new 52-week low of $11.51 a share. During that downtrend, shares of VJET have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of VJET have now started to rebound higher off that 52-week low of $11.51 and it's quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in VJET if it manages to break out above some near-term overhead resistance at $14.28 a share to its 50-day moving average of $15.38 a share with high volume. Watch for a sustained move or close above those levels with volume that registers near or above its three-month average action of 405,011 shares. If that breakout materializes soon, then VJET will set up to re-test or possibly take out its next major overhead resistance levels at $16 to $17.66 a share, or even $18.45 to $19.95 a share.

Traders can look to buy VJET off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support at $12 a share. One can also buy VJET 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.

ReWalk Robotics

Another healthcare player that's starting to trend within range of triggering a near-term breakout trade is ReWalk Robotics (RWLK) , which designs, develops and commercializes exoskeletons for wheelchair-bound individuals. This stock is off to a decent start so far in 2014, with shares up around 12%.

If you take a glance at the chart for ReWalk Robotics, you'll see that this stock has been downtrending over the last few weeks, with shares moving lower from its high of $35.55 to its recent low of $23.50 a share. During that downtrend, shares of RWLK have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of RWLK have now started to rebound higher off that $23.50 low and it's quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in RWLK if it manages to break out above some near-term overhead resistance levels at Friday's intraday high of $30 to some more near-term overhead resistance levels at $31.48 to $32.95 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 2.08 million shares. If that breakout triggers soon, then RWLK will set up to re-test or possibly take out its next major overhead resistance levels at $35.55 to its all-time high of $43.71 a share.

Traders can look to buy RWLK off weakness to anticipate that breakout and simply use a stop that sits right below $25 a share or below $23.50 a share. One can also buy RWLK 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.

Protalix BioTherapeutics

 

My final breakout trading prospect is biopharmaceutical player Protalix BioTherapeutics (PLX) , which focuses on the development and commercialization of recombinant therapeutic proteins based on its proprietary ProCellEx protein expression system. This stock has under heavy selling pressure so far in 2014, with shares off sharply by 31%.

If you look at the chart for Protalix BioTherapeutics, you'll notice that this stock has been spiking sharply higher over the last few weeks on an intraday basis with a number of strong upside volume days. Those unusual volume days to the upside have now pushed shares of PLX back above its 50-day moving average of $2.50 a share. That move is quickly pushing shares of PLX within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in PLX if it manages to break out above Friday's intraday high of $2.81 to some more near-term overhead resistance levels at $3 to $3.20 a share 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 461,492 shares. If that breakout gets set off soon, then PLX will set up to re-test or possibly take out its next major overhead resistance levels at $3.65 to its 200-day moving average at $3.75, or $4.14 to $4.20 a share. Any high-volume move above $4.20 will then give PLX a chance to make a run at $5 a share.

Traders can look to buy PLX off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day moving average of $2.50 a share or just below $2.20 a share. One can also buy PLX 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.

-- Written by Roberto Pedone in Delafield, Wis.

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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.

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