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.


Alkermes

One integrated biopharmaceutical player that's starting to spike within range of triggering a big breakout trade is Alkermes  (ALKS) , which engages in the research, development and commercialization of pharmaceutical products to address unmet medical needs of patients in various therapeutic areas. This stock has been slammed by the bears over the last six months, with shares down big by 54.1%.

If you take a look at the chart for Alkermes, you'll notice that this stock recently gapped-down sharply lower from over $60 a share to under $35 a share with massive downside volume flows. Following that move, this stock went on to print a new 52-week low of $27.78 a share just a few weeks later. Shares of Alkermes ripped sharply higher on Thursday and displayed relative strength versus the overall market weakness right above that recent low of $27.78 a share. Volume for that trading session clocked in at 2.57 million shares, which is well above its three-month average action of 1.42 million shares. This high-volume spike to the upside is now quickly pushing this stock within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in Alkermes if it manages to break out above some near-term overhead resistance levels at Thursday's intraday high of $31.91 a share to more resistance at $32.57 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 1.42 million 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 $34.50 to $37.71, or even its 20-day moving average of $38.30 to its gap-down-day high from January at $40.28 a share. Any high-volume move above $40.28 a share will then give this stock a chance to re-fill some of its previous gap-down-day zone that started above $60 a share.

Traders can look to buy Alkermes off weakness to anticipate that breakout and simply use a stop that sits right around Thursday's intraday low of $29.29 a share or near its new 52-week low of $27.78 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.

Juno Therapeutics


A biopharmaceutical player that's starting to spike within range of triggering near-term breakout trade is Juno Therapeutics  (JUNO) , which engages in developing cell-based cancer immunotherapies. This stock has been hit hard by the bears over the last three months, with shares falling sharply by 47.7%.

If you take a glance at the chart for Juno Therapeutics, you'll notice that this stock has been uptrending a bit over the last few weeks, with shares moving higher off its new 52-week low of $22.37 a share to its recent high of $29.06 a share with a number of strong upside volume days. This stock counter-trended higher on Thursday right above some near-term support at $25 a share with decent upside volume flows. Volume for that trading session registered over 1.27 million shares, which is just above its three-month average action of 1.19 million shares. This high-volume rip to the upside is now quickly pushing shares of Juno Therapeutics within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Juno Therapeutics if it manages to break out above some near-term overhead resistance levels at $29.06 to its 20-day moving average of $29.15 a share and then above more key resistance at$30 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 1.19 million 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 $33 to $34.50, or even $35 to its 50-day moving average of $38.53 a share.

Traders can look to buy Juno Therapeutics off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $25 a share. One could also buy this stock 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.

Genocea Biosciences


Another biopharmaceutical player that's starting to rip higher and move within range of triggering a big breakout trade is Genocea Biosciences  (GNCA) , which discovers and develops novel vaccines and immunotherapies to treat infectious diseases. This stock has been annihilated by the bears over the last three months, with shares plunging lower by 76.1%.

If you take a glance at the chart for Genocea Biosciences, you'll notice that this stock surged sharply higher on Thursday and displayed some relative strength versus the overall market weakness right above its new 52-week low of $2.56 a share with above-average volume. This high-volume jump higher is now quickly pushing shares of Genocea Biosciences 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 Genocea Biosciences if it manages to break out above Thursday's intraday high of $3.10 a share and then once it clears more key resistance at $3.18 to its 20-day moving average of $3.30 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 179,131 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 $3.75 to $4.03, or even $4.25 to its 50-day moving average of $4.69 a share.

Traders can look to buy Genocea Biosciences off weakness to anticipate that breakout and simply use a stop that sits right below Thursday's intraday low of $2.65 a share or just below its new 52-week low of $2.56 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.

Sorrento Therapeutics

 

Another biopharmaceutical player that's starting to trend within range of triggering a big breakout trade is Sorrento Therapeutics  (SRNE) , which focuses on the discovery, acquisition, development and commercialization of proprietary drug therapeutics for addressing unmet medical needs in the U.S., Europe and internationally. This stock has been destroyed by the bears over the last six months, with shares collapsing by 71%.

If you take a glance at the chart for Sorrento Therapeutics, you'll notice that this stock jumped sharply higher on Thursday and displayed some relative strength versus the overall market weakness right off its new 52-week low of $4.25 a share with strong upside volume flows. This stock has been downtrending badly over the last two months and change, with shares falling sharply off its high of $10.26 to its new 52-week low of $4.25 a share. During that downtrend, shares of Sorrento Therapeutics have been consistently making lower highs and lower lows, which is bearish technical price action. That said, this stock ripped higher on Thursday after printing a new 52-week low with strong upside volume flows. Volume for that trading session registered over 530,000 shares, which is well above its three-month average action of 461,810 shares. This high-volume rip to the upside is now quickly pushing shares of Sorrento Therapeutics within range of triggering a big breakout trade above some near-term overhead resistance levels.

Traders should now look for long-biased trades in Sorrento Therapeutics if it manages to break out above some near-term overhead resistance levels at $5.02 to $5.30 a share and then above $5.35 to its 20-day moving average of $5.43 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 461,810 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 $6 to $6.32, or even its 50-day moving average of $6.96 a share.

Traders can look to buy Sorrento Therapeutics off weakness to anticipate that breakout and simply use a stop that sits right around its new 52-week low of $4.25 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.

Sarepta Therapeutics


My final breakout trading idea is biopharmaceutical player Sarepta Therapeutics  (SRPT) , which focuses on the discovery and development of RNA-based therapeutics for the treatment of rare, infectious and other diseases. This stock has been under heavy selling pressure over the last six months, with shares dropping huge by 65%.

If you look at the chart for Sarepta Therapeutics, you'll notice that this stock recently gapped-down sharply lower from over $32 a share to under $13 a share with heavy downside volume flows. Following that move, this stock went on to print a new 52-week low at $10.20 a share. Shares of Sarepta Therapeutics spiked notably higher on Thursday and counter-trended versus the overall market weakness with slightly lighter-than-average volume. This display of relative strength 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 Sarepta Therapeutics if it manages to break out above some key near-term overhead resistance levels at $12 to $12.64 a share and then above more resistance levels at $12.95 to its 20-day moving average of $13.10 a share with volume that hits near or above its three-month average action of 1.95 million shares. If that breakout takes hold soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at around $14 to $15 a share, or even its gap-down-day high of $15.78 a share. Any high-volume move above $15.78 a share will then give this stock a chance to re-fill some of its previous gap-down-day zone from January that started just above $32 a share.

Traders can look to buy shares of Sarepta Therapeutics off weakness to anticipate that breakout and simply use a stop that sits right below Thursday's intraday low of $10.96 a share or right around its new 52-week low of $10.20 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 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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