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.


Dicerna Pharmaceuticals

One biopharmaceutical stock that's starting to spike higher within range of triggering a big breakout trade is Dicerna Pharmaceuticals  (DRNA - Get Report) , which focuses on the discovery and development of treatments for liver diseases and cancers based on a proprietary RNA interference technology platform in the U.S. and internationally. This stock has been slammed lower by the bears over the last six months, with shares down sharply by 59.3%.

If you take a look at the chart Dicerna Pharmaceuticals you'll notice that this stock recently formed a triple bottom chart pattern, after shares found some buying interest over the last month and change at $9.01, $9.07 and $9.35 a share. This stock ripped sharply higher on Thursday right above those support levels and back above its 20-day moving average of $10.40 a share with strong upside volume flows. Volume for that trading session registered over 200,000 shares, which is just above its three-month average action of 172,927 a share. That high-volume move to the upside is now quickly pushing this stock within range of triggering a big breakout trade above a key downtrend line that dates back to August.

Traders should now look for long-biased trades in Dicerna Pharmaceuticals if it manages to break out above some near-term overhead resistance levels at its 50-day moving average of $11.62 to more resistance at $11.78 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 172,927 shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $12.30 to $12.73, or even $14 to $15 a share.

Traders can look to buy Dicerna Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right around Thursday's intraday low of $9.81 a share or near more key support at $9.35 a share. One can also buy this stock 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.


Omeros

Another biopharmaceutical stock that's starting to trend within range of triggering a big breakout trade is Omeros  (OMER - Get Report) , which discovers, develops, and commercializes small-molecule and protein therapeutics, and orphan indications targeting inflammation, coagulopathies and disorders of the central nervous system. This stock has been hit hard by the sellers over the last six months, with shares off large by 41.2%.

If you take a glance at the chart for Omeros, you'll notice that this stock has been downtrending badly over the last month and change, with shares plugging sharply lower from its high of $30.23 to its recent low of $12.29 a share. During that downtrend, this stock has been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of Omeros have now started to rip higher off that $12.29 low and it's entered a short-term uptrend. That move is now quickly pushing this stock 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 Omeros if it manages to break out above some near-term overhead resistance levels at $14 to $14.34 and then above its 20-day moving average of $14.85 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 1.43 million shares. If that breakout materializes soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $16.06 to $17, or even $19 a share.

Traders can look to buy Omeros off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $13 to $12.70 a share. One could also buy this stock 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.

Infinity Pharmaceuticals


Another stock that's starting to move within range of triggering a near-term breakout trade is Infinity Pharmaceuticals  (INFI - Get Report) , which discovers, develops and delivers medicines to patients with difficult-to-treat diseases. This stock has been smacked lower by the bears over the last six months, with shares down big by 42.7%.

If you take a glance at the chart for Infinity Pharmaceuticals, you'll notice that this stock has been consolidating and trending sideways over the last month and change, with shares moving between its recent low of $8.20 on the downside and right around $10 a share on the upside. Shares of Infinity Pharmaceuticals ripped sharply higher on Thursday right off its 20-day moving average of $8.86 and back above its 50-day moving average of $9.16 a share with decent upside volume flows. That sharp spike higher is now pushing this name within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Infinity Pharmaceuticals if it manages to break out above some key near-term overhead resistance levels at $9.37 to around $10 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 626,389 shares. If that breakout triggers soon, then this stock will set up to re-test or possibly take out its next major overhead resistance level at $10.50 to $11, or even $11.13 to close to $12 a share.

Traders can look to buy Infinity Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right around some near-term support levels at $8.50 to $8.20 a share. One can also buy this stock 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.

Plug Power


Another stock that's quickly moving within range of triggering a near-term breakout trade is Plug Power  (PLUG - Get Report) , which engages in the design, development, manufacture and commercialization of fuel cell systems for the industrial off-road markets worldwide. This stock has been smashed lower by the bears over the last three months, with shares off sharply by 31.2%.

If you take a glance at the chart for Plug Power, you'll notice that this stock has been downtrending badly over the last month and change, with shares falling sharply lower from its high of $2.85 to its recent low of $1.85 a share. During that downtrend, shares of Plug Power have been consistently making lower highs and lower lows, which is bearish technical price action. That said, this stock has started to rebound off that $1.55 low and it's now entered a new short-term uptrend. Shares of Plug Power ripped to the upside on Thursday back above its 20-day moving average of $1.75 a share with strong upside volume flows. Volume for that trading session hit over 3.56 million shares, which is well above its three-month average action of 2.80 million shares. That strong spike is now starting to push this stock within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in Plug Power if it manages to break out above some near-term overhead resistance levels at $1.79 to $1.80 a share and then above more key resistance at $2 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 2.80 million shares. If that breakout hits soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $2.14 to $2.30, or even $2.50 to its 200-day moving average of $2.63 a share.

Traders can look to buy Plug Power off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $1.66 to $1.64 a share. One can also buy this stock 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.


Spark Therapeutics


My final breakout trading prospect is biotechnology stock Spark Therapeutics  (ONCE - Get Report) , which focuses on the development of gene therapy products for patients suffering from debilitating genetic diseases. This stock has been a target of the bears over the three months, with shares off sharply by 31.6%.

If you look at the chart for Spark Therapeutics, you'll notice that this stock has been uptrending strong over the last few weeks, with shares ripping higher off its new 52-week low of $36.96 to its recent high of $47.59 a share. During that uptrend, shares of Spark Therapeutics have been making mostly higher lows and higher highs, which is bullish technical price action. This stock spiked notably higher on Thursday right off its 20-day moving average of $43.93 a share with decent upside volume flows. That sharp move to the upside is now quickly pushing shares of Spark Therapeutics 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 Spark Therapeutics if it manages to break out above some near-term overhead resistance levels at $46.89 to $47.59 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 319,500 shares. If that breakout gets started soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $52.79 to $55, or even $57 to $60 a share.

Traders can look to buy shares of Spark Therapeutics off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $43.58 a share. One can also buy this stock off strength once it starts take out those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

 

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