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 possibly trade higher from current levels.

Pandora Media


One stock that's starting to trend within range of triggering a big breakout trade is Pandora Media  (P), which provides Internet radio services in the U.S. This stock has been slammed lower by the bears over the last six months, with shares down sharply by 43.2%.

If you take a look at the chart for Pandora Media, you'll see that this stock gapped down sharply back in February from $18.90 a share to under $15 a share with heavy downside volume. Following that move, shares of P have now started to consolidate and trend sideways, with the stock moving between $14.50 on the downside and $15.80 on the upside. This stock is now starting to spike higher off some near-term support levels at $14.56 to $14.50 a share and it's beginning to trend within range of triggering a big breakout trade above the upper-end of its recent sideways trading chart pattern.

Traders should now look for long-biased trades in P if it manages to break out above some near-term overhead resistance levels at $15.80 a share to its 50-day moving average of $16.01 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 6.40 million shares. If that breakout hits soon, then P will set up to re-fill some of its previous gap-down-day zone from February that started near $19 a share.

Traders can look to buy P off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at its new 52-week low of $14.50 a share. One can also buy P 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.

Zulily


Another stock that's starting to spike within range of triggering a big breakout trade is Zulily  (ZU), which operates as an online retailer in the U.S., Canada and Australia. This stock has been destroyed by the bears over the last six months, with shares down huge by 61.8%.

If you take a glance at the chart for Zulily, you'll notice that this stock has been downtrending badly for the last six months, with shares plunging lower from its high of over $39 a share to its new 52-week low of $12.75 a share. During that downtrend, shares of ZU have been consistently making lower highs and lower lows, which is bearish technical price action. Shares of ZU spiked sharply higher on Thursday right off its 52-week low of $12.75 with heavy upside volume flows. Volume on Thursday registered over 5.30 million shares, which is well above its three-month average action of 2.25 million shares. That spike is now quickly pushing shares of ZU 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 ZU if it manages to break out above some key near-term overhead resistance levels at $14.25 a share to its gap-down-day high from February at $15.25 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 action of 2.25 million shares. If that breakout develops soon, then ZU will set up to re-fill some of its previous gap-down-day zone from February at started near $20 a share.

Traders can look to buy ZU off weakness to anticipate that breakout and simply use a stop that sits right below its new 52-week low of $12.75 a share. One could also buy ZU 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.

Vertex Energy

An environmental services stock that's starting to move within range of triggering a big breakout trade is Vertex Energy  (VTNR), which provides various services designed to aggregate, process, and recycle industrial and commercial waste streams, as well as off-specification commercial chemical products. This stock has been hammered lower by the bears over the last six months, with shares dropping large by 57.6%.

If you take a glance at the chart for Vertex Energy, you'll see that this stock is attempting to carve out a bottoming chart pattern here, since shares have found buying interest over the last two months and change at $3.18 to $3.14 a share. This stock is now starting to spike higher off those support levels and it's beginning to move within range of triggering a big breakout trade above a key downtrend line that dates back to last December.

Traders should now look for long-biased trades in VTNR if it manages to break out above its 50-day moving average of $3.50 a share to some more near-term overhead resistance at around $3.70 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 186,963 shares. If that breakout begins soon, then VTNR will set up to re-test or possibly take out its next major overhead resistance levels at $3.94 to $4.55 a share.

Traders can look to buy VTNR off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $3.14 a share or just below $3 a share. One can also buy VTNR off strength once it starts to move back above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Marathon Patent Group

Another stock that's starting to trend within range of triggering a near-term breakout trade is Marathon Patent Group  (MARA), which acquires patents from various patent holders ranging from individual inventors to Fortune 500 companies. This stock has been underperforming over the last three months, with shares down by 19.3%.

If you take a glance at the chart for Marathon Patent Group, you'll notice that this stock has been attempting to carve out a major bottoming chart pattern over the last two months, with shares finding buying interest at $6.35, $6.42 and 6.50 a share. As buyers have stepped into to buy the stock at those levels, shares of MARA have so far either held or trended very tight to its 200-day moving average. Now this stock is starting to spike higher right above those support levels and it's quickly moving within range of triggering a near-term breakout trade above a key downtrend line that dates back to January.

Traders should now look for long-biased trades in MARA if it manages to break out above its 50-day moving average of $7.32 a share and then once it clears some more key overhead resistance at $7.80 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 action of 103,877 shares. If that breakout materializes soon, then MARA will set up to re-test or possibly take out its next major overhead resistance levels at $8.40 to its 52-week high of $9.73 a share.

Traders can look to buy MARA off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $6.50 a share or at $6.35 a share. One can also buy MARA off strength once it starts to trend above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Gentex


My final breakout trading prospect is auto parts player Gentex  (GNTX - Get Report), which is a supplier of automatic-dimming rearview mirrors and electronics to the automotive industry, dimmable aircraft windows for aviation markets, and fire protection products to the fire protection market. This stock has been in play with the bulls over the last six months, with shares jumping higher by 21.6%.

If you look at the chart for Gentex, you'll notice that this stock spiked notably higher on Thursday right off its 50-day moving average of $17.49 a share. That spike to the upside is now quickly pushing shares of GNTX within range of triggering a big breakout trade above a number of key near-term overhead resistance levels.

Traders should now look for long-biased trades in GNTX if it manages to break out above some key near-term overhead resistance levels at $18 to $18.62 a share and then above $18.98 to its 52-week high of $19.06 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 action of 1.61 million shares. If that breakout gets started soon, then GNTX will set up to enter new 52-week-high territory above $19.06 a share, which is bullish technical price action. Some possible upside targets off that move are $23 to $25 a share, or even $30 a share.

Traders can look to buy GNTX off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $17 to $16.50 a share, or down near its 200-day moving average of $15.80 a share. One can also buy GNTX off strength once it starts to spike above those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.