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.

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