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.

NN 

One industrial goods player that's starting to trend within range of triggering a big breakout trade is NN (NNBR) , which manufactures and sells metal bearing, plastic and rubber, and precision metal components for bearing, automotive and industrial parts manufacturers worldwide. This stock has been smacked hard by the bears over the last six months, with shares off sharply by 45.7%.

If you take a look at the chart for NN, you'll notice that this stock has been consolidating and trending sideways over the last few weeks, with shares moving between $10.57 on the downside and $12.13 on the upside. Shares of NN spiked sharply higher on Thursday right above the lower-end of its recent range with strong upside volume flows. Volume for that day registered 399,000 shares, which is well above its three-month average action of 293,568 shares. This high-volume spike is now quickly pushing shares of NN 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 NN if it manages to break out above some key near-term overhead resistance at $12.13 a share and then once it clears its 20-day moving average of $12.19 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 293,568 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 around $13 to its 50-day moving average of $14.50 a share, or even north of $15 a share.

Traders can look to buy NN off weakness to anticipate that breakout and simply use a stop that sits right below Thursday's intraday low of $11.16 or around its new 52-week low of $10.57 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.

Seres Therapeutics


Another stock that's starting to spike within range of triggering a big breakout trade is Seres Therapeutics  (MCRB) , which focuses on the development of biological drugs designed to restore health by repairing the function of a dysbiotic microbiome. This stock has been under heavy selling pressure over the last six months, with shares down large by 32.7%.

If you take a glance at the chart for Seres Therapeutics, you'll notice that this stock has been making some higher lows over the last few weeks, after it tagged a new 52-week low of $22.76 a share. This equity spiked sharply higher on Thursday right above some near-term support at $23.83 a share, and that spike is now quickly pushing shares of Seres 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 Seres Therapeutics if it manages to break out above its 20-day moving average of $27.03 a share and then once it clears some more key resistance at $27.73 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 240,658 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 $30 to its 50-day moving average of $32.60 a share, or even $34 to $36 a share.

Traders can look to buy Seres Therapeutics off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $23.83 a share. One could also buy this stock off strength once it starts to trend back above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

OSI Systems

An industrial goods player that's starting to rebound within range of triggering a big breakout trade is OSI Systems  (OSIS) , which engages in the design, manufacture and sale of specialized electronic systems and components worldwide. This stock has been smashed lower by the bears over the last three months, with shares off sharply by 33.8%.

If you take a glance at the chart for OSI Systems, you'll notice that this stock recently gapped-down sharply lower from around $80 a share to its new 52-week low of $48.19 a share with monster downside volume flows. Following that crash, shares of OSI Systems have now started to rebound off that $48.19 low to its intraday high on Thursday of $56.39 a share. That rebound 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 OSI Systems if it manages to break out above some key near-term overhead resistance levels at Thursday's intraday high of $56.39 a share and then once it takes out its gap-down-day high of $58.50 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 272,934 shares. If that breakout develops soon, then this stock will set up to re-fill some of its previous gap-down-day zone that started near $80 a share.

Traders can look to buy OSI Systems off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $52.50 a share or near $51 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.

Esperion Therapeutics


A biopharmaceutical player that's starting to trend within range of triggering a big breakout trade is Esperion Therapeutics  (ESPR) , which focuses on the research, development and commercialization of oral and low-density lipoprotein cholesterol lowering therapies for the treatment of patients with hypercholesterolemia and other cardiometabolic risk markers. This stock has been destroyed by the sellers over the last six months, with shares down huge by 73.9%.

If you take a glance at the chart for Esperion Therapeutics, you'll notice that this stock ripped sharply higher on Thursday back above its 20-day moving average of $15.80 a share with decent upside volume flows. This strong spike to the upside is now quickly pushing shares of Esperion Therapeutics 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 Esperion Therapeutics if it manages to break out above that key downtrend line which will trigger over Thursday's intraday high of $16.45 a share and then above more key resistance at $17 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 625,321 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 $19.50 to its 50-day moving average of $21.24 a share, or even $23 a share.

Traders can look to buy Esperion Therapeutics off weakness to anticipate that breakout and simply use a stop that sits just below Thursday's intraday low of $14.44 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.

Navient


My final breakout trading idea is credit services player Navient  (NAVI) , which provides financial products and services in the U.S. This stock has been acting weak over the last six months, with shares off large by 38.7%.

If you look at the chart for Navient, you'll notice that this stock has recently attempted to carve out a double bottom chart pattern, after shares found some buying interest at $8.29 to $8.39 a share. Following that potential bottom, shares of Navient have now started to spike sharply higher right above those support levels, and back above its 20-day moving average of $9.38 a share with decent upside volume flows. 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 Navient if it manages to break out above Thursday's intraday high of $9.73 a share and then above more key resistance at around $10 a share with volume that hits near or above its three-month average action of 4.94 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 $10.50 to its 50-day moving average of $10.87, or even $11.50 to $12 a share.

Traders can look to buy shares of Navient off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $9 a share or around those recent double bottom support levels. 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 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.

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