5 Stocks Ready for 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 possibly trade higher from current levels.

Immune Pharmaceuticals


A clinical stage biopharmaceutical player that's starting to trend within range of triggering a big breakout trade is Immune Pharmaceuticals  (IMNP), which develops and commercializes targeted therapeutics for the treatment of inflammatory diseases and cancer. This stock has been smashed lower by the sellers over the last six months, with shares off sharply by 32%.

If you take a look at the chart for Immune Pharmaceuticals, you'll see that this stock has been trending inside of a large range for the last month and change, with shares moving between $1.69 on the downside and $2.23 on the upside. Shares of IMNP ripped higher on Thursday right off its 50-day moving average of $1.88 a share with strong upside volume flows. Volume for the day registered over 426,000 shares, which is well above its three-month average action of 173,226 shares. This spike is now quickly pushing shares of IMNP 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 IMNP if it manages to break out above some near-term overhead resistance levels at $2.13 to $2.23 a share and then above more resistance at $2.32 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 173,226 shares. If that breakout develops soon, then IMNP will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $2.58 to $3 a share.

Traders can look to buy IMNP off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $1.88 a share or around some more near-term support at $1.75 a share. One can also buy IMNP 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.

Tesla Motors


Another stock that's quickly moving within range of triggering a big breakout trade is Tesla Motors  (TSLA), which designs, develops, manufactures and sells electric vehicles, electric vehicle powertrain components, and stationary energy storage systems in the U.S., China, Norway, and internationally. This stock has been on the move higher over the last three months, with shares trending up by 8.9%.

If you take a glance at the chart for Tesla Motors, you'll notice that this stock bounced strongly to the upside on Thursday right off some near-term support at $220.40 a share with strong upside volume flows. This bounce has now pushed shares of TSLA back above its 200-day moving average of $227.28 a share, after it dipped briefly below that level. Shares of TSLA are now quickly moving within range of triggering a big breakout trade above some near-term overhead resistance levels.

Traders should now look for long-biased trades in TSLA if it manages to break out above some near-term overhead resistance levels at Thursday's intraday high of $237.48 a share and then above more key near-term overhead resistance at $239.50 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 action of 5.40 million shares. If that breakout gets set off soon, then TSLA will set up to re-test or possibly take out its next major overhead resistance levels at $260 to $265 a share, or even $280 to $290 a share.

Traders can look to buy TSLA off weakness to anticipate that breakout and simply use a stop that sits right below its 200-day at $227.28 a share or right around Thursday's low of $220.25 a share. One could also buy TSLA 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.

Q2 Holdings


Another technology stock that's starting to move within range of triggering a big breakout trade is Q2 Holdings  (QTWO), which provides secure cloud-based virtual banking solutions to regional and community financial institutions. This stock has been in play with the bulls over the last six months, with shares moving to the upside by 14.3%.

If you take a glance at the chart for Q2 Holdings, you'll see that this stock ripped sharply higher on Thursday right off its 50-day moving average of $20.69 a share with decent upside volume flows. This spike higher for QTWO also pushed the stock above some near-term overhead resistance at $21.17 a share. That move is now quickly pushing shares of QTWO within range of triggering a much bigger breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in QTWO if it manages to break out above some key near-term overhead resistance levels at $21.65 to $21.89 a share and then above its all-time high of $21.96 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 184,762 shares. If that breakout materializes soon, then QTWO will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $25 to $30 a share.

Traders can look to buy QTWO off weakness to anticipate that breakout and simply use a stop that sits right below Thursday's low of $20.45 a share or near some more key near-term support at $19.55 a share. One can also buy QTWO off strength once it starts to snap above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

A.M. Castle


Another stock player that's rapidly moving within range of triggering a major breakout trade is A.M. Castle  (CAS), which operates as a specialty metals and plastics distribution company in the U.S., Canada, Mexico, France, the U.K., Spain, China and Singapore. This stock has been destroyed by the sellers over the last six months, with shares down sharply by 47.3%.

If you take a glance at the chart for A.M. Castle & Co., you'll see that this stock gapped down sharply back in March from just under $5 a share to its new 52-week low of $2.80 a share with monster downside volume flows. Following that move, shares of CAS have completely reversed its trend and entered a new uptrend, with the stock consistently making higher lows and higher highs. Shares of CAS jumped higher on Thursday right above its 50-day moving average of $3.71 a share with monster upside volume. Volume on the day registered over 1.32 million shares, which is well above its three-month average action 284,580 shares. This spike is now quickly moving shares of CAS within range of triggering a major breakout trade.

Traders should now look for long-biased trades in CAS if it manages to break out above some major overhead resistance levels at $4.18 to $4.19 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 284,580 shares. If that breakout develops soon, then CAS will set up to re-test or possibly take out its next major overhead resistance levels at $5 to $6 a share, or even $6.50 a share.

Traders can look to buy CAS off weakness to anticipate that breakout and simply use a stop that sits right below that uptrend line at around $3.80 a share or near its 50-day moving average of $3.71 a share. One can also buy CAS off strength once it starts to crack above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Oasis Petroleum


My final breakout trading prospect is independent oil and gas player Oasis Petroleum  (OAS), which focuses on the acquisition and development of unconventional oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin. This stock has been smacked lower by the bears over the last six months, with shares off sharply by 39.3%.

If you look at the chart for Oasis Petroleum, you'll notice that this stock has been consolidating and trending sideways over the last month and change, with shares moving between $15 a share on the downside and $18.86 a share on the upside. Shares of OAS ripped sharply higher on Thursday right off its 50-day moving average of $15.42 a share with strong upside volume flows. Volume for the day registered over 14.1 million shares, which is well above its three-month average action of 9.26 million shares. That rip higher is now quickly pushing shares of OAS within range of triggering a big breakout trade above the upper-end of its recent sideways trending chart pattern.

Traders should now look for long-biased trades in OAS if it manages to break out above some key near-term overhead resistance levels at $18 to $18.11 a share and then above $18.86 to $19.63 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 9.26 million shares. If that breakout triggers soon, then OAS will set up to re-test or possibly take out its next major overhead resistance levels at $23 to $25 a share, or even its 200-day moving average of $26.35 a share.

Traders can look to buy OAS off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $15 or at $14.50 a share. One can also buy OAS off strength once it starts to take out 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.

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