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.

Insight Enterprises

One application software player that's quickly trending within range of triggering a big breakout trade is Insight Enterprises  (NSIT) , which provides information technology hardware, software and services solutions that manages and secures IT environments for businesses and government clients. This stock has traded off modestly over the last six months, with shares down just 6%.

If you take a look at the chart for Insight Enterprises, you'll notice that this stock formed a major bottoming chart pattern over the last two months, with shares finding consistent buying interest between $25 and $24 a share. Following that bottom, shares of Insight Enterprises have now started to spike notably higher with the stock moving back above both its 50-day moving average of $25.84 and its 20-day moving average of $26.75 a share with strong upside volume flows. That high-volume trend has now pushed 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 Insight Enterprises if it manages to break out above its 200-day moving average of $27.43 a share and then once it clears some more key near-term overhead resistance levels at $27.73 to around $28 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 169,578 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 $29.13 to $30.50, or even $31 to its 52-week high of $32.80 a share.

Traders can look to buy Insight Enterprises off weakness to anticipate that breakout and simply use a stop that sits right around its 50-day moving average of $25.84 a share or just below more support at $25.50 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.

Michael Kors


Another stock that's starting to spike within range of triggering a big breakout trade is Michael Kors  (KORS) , which engages in the design, marketing, distribution and retailing of branded women's apparel and accessories and men's apparel. This stock has been smacked lower by the sellers over the last six months, with shares off large by 30.4%.

If you take a glance at the chart for Michael Kors, you'll notice that this stock has been ripping higher over the last few trading sessions with strong upside volume flows. During that high-volume trend to the upside, shares of Michael Kors have now spiked higher back above its 20-day moving average of $40.24 and its 50-day moving average of $42.06 a share. That spike 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 Michael Kors if it manages to break out above some key near-term overhead resistance levels at $44.79 to $45.43 a share and then above more resistance at $45.82 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 3.77 million shares. If that breakout triggers soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $48 to around $50, or even its gap-down-day high from May at just above $50 a share. Any high-volume move above $50 a share will then give this stock a chance to re-fill some of its previous gap-down-day zone that started near $62 a share.

Traders can look to buy Michael Kors off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $42.06 a share or near its 20-day moving average of $40.24 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.

Bellicum Pharmaceuticals

A clinical-stage biopharmaceutical player that's quickly moving within range of triggering a big breakout trade is Bellicum Pharmaceuticals  (BLCM) , which focuses on discovering and developing novel cellular immunotherapies for the treatment of hematological cancers, solid tumors and orphan inherited blood disorders in the U.S. and internationally. This stock has been under notable selling pressure over the last six months, with shares down sharply by 29.8%.

If you take a glance at the chart for Bellicum Pharmaceuticals, you'll notice that this stock has been ripping sharply higher over the last few trading sessions off its new 52-week low of $12.25 a share to back above $15 a share with strong upside volume flows. This high-volume spike to the upside has now pushed shares of Bellicum Pharmaceuticals back above both its 20-day moving average of $13.99 a share and its 50-day moving average of $15.65 a share. This large spike higher has now pushed 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 Bellicum Pharmaceuticals if it manages to break out above Thursday's intraday high of $16.17 a share and then above more key near-term overhead resistance at $16.43 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 330,488 shares. If that breakout develops soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $18 to $20, or even its 200-day moving average of $20.91 to $23 a share.

Traders can look to buy Bellicum Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right around its 20-day moving average of $13.99 a share. One can also buy this stock 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.

Xencor


Another clinical stage biopharmaceutical player that's quickly trending within range of triggering a major breakout trade is Xencor  (XNCR) , which focuses on discovery and development of engineered monoclonal antibodies to treat severe and life-threatening diseases with unmet medical needs. This stock has been destroyed by the bears over the last three months, with shares plunging lower by 40.2%.

If you take a glance at the chart for Xencor, you'll see that this stock has been downtrending massively lover the last four months, with shares collapsing lower off its 52-week high of $24.82 to its recent low of $10.68 a share. During that downtrend, shares of Xencor have been consistently making lower highs and lower lows, which is bearish technical price action. That said, this stock has now started to spike sharply higher off that $10.68 low and it's trending back above its 20-day moving average of $11.88 a share. That recent rebound off the lows is now quickly pushing this stock 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 Xencor if it manages to break out above Thursday's intraday high of $13.18 a share to more key resistance at $14 a share and then above its 50-day moving average of $14.15 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 309,148 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 $16 to its 200-day moving average of $16.83, or even $19 to $20 a share.

Traders can look to buy Xencor off weakness to anticipate that breakout and simply use a stop that sits right below its 20-day moving average of $11.88 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.

Stone Energy


My final breakout trading prospect is independent oil and natural gas player Stone Energy  (SGY) , which engages in the acquisition, exploration, exploitation, development  and operation of oil and gas properties in the Gulf of Mexico and the Appalachia region. This stock has been hammered lower by the bears over the last six months, with shares falling dramatically by 55.7%.

If you look at the chart for Stone Energy, you'll notice that this stock has been forming a major bottoming chart pattern over the last two months and change, with shares finding buying interest at around $5 to $4.70 a share. This stock has now started to trend back above both its 50-day moving average of $6.06 a share and its 20-day moving average of $6.37 a share with strong upside volume flows. Shares of Stone Energy broke out on Thursday above some near-term overhead resistance at $6.67 a share with above-average volume. This breakout is now quickly pushing this stock within range of triggering a much bigger breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in Stone Energy if it manages to break out above Thursday's intraday high of $7.04 a share and then above some key near-term overhead resistance levels at $7.38 to $7.50 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 2.83 million shares. If that breakout kicks off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at around $8.50 to just under $10, or even $11 to its 200-day moving average of $11.46 a share.

Traders can look to buy shares of Stone Energy off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $6.06 a share or near more key support just under $5.75 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 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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