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. These are also the exact type of stocks that I love to trade and alert in real-time. I frequently flag 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.

Concert Pharmaceuticals

One clinical-stage biopharmaceutical player that's starting to spike within range of triggering a near-term breakout trade is Concert Pharmaceuticals  (CNCE) , which discovers and develops small molecule drugs for genetic diseases, inflammatory disease and neurologic disorders. This stock has been under selling pressure over the last six months, with shares off sharply by 29.3%.

If you take a look at the chart for Concert Pharmaceuticals, you'll notice that this stock has carved out a major bottoming chart pattern over the last month, with shares finding some buying interest at $12.27 to $12.16 and $12.28 a share. Following that potential bottom, this stock has now started to rip higher with strong upside volume flows back above its 20-day moving average of $13.18 a share. Volume on Thursday registered over 320,000 shares, which is well above its three-month average action of 152,698 shares. This high-volume spike is now quickly pushing shares of Concert Pharmaceuticals within range of triggering a big breakout trade.

Traders should now look for long-biased trades in Concert Pharmaceuticals if it manages to break out above its 50-day moving average of $13.83 a share and then above $14 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 152,698 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 $14.50 to $14.80, or even $16 to its 200-day moving average of $17.65 a share.

Traders can look to buy Concert Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right around those recent major bottom support levels. 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.

Aduro Bio Tech

A clinical-stage immunotherapy player that's starting to trend within range of triggering a big breakout trade is Aduro Bio Tech  (ADRO) , which focuses on the discovery, development, and commercialization that transform the treatment of challenging diseases. This stock has been smacked by the sellers over the last six months, with shares down large by 34.7%.

If you take a glance at the chart for Aduro Bio Tech, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $11.23 to $11.10 a share. Following that potential bottom, this stock has now started to spike higher on Thursday above those support levels with strong upside volume. Volume for that trading session registered over 400,000 shares, which is just above its three-month average action of 373,366 shares. This high-volume rip is now quickly pushing this stock within range of triggering a big breakout trade.

Traders should now look for long-biased trade in Aduro Bio Tech if it manages to break out above some key near-term resistance levels at $13.19 to $13.49 a share and then above its 20-day moving average of $13.59 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 373,366 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 its 50-day moving average of $14.68 a share to $15, or even $16 to $17.72 a share.

Traders can look to buy Aduro Bio Tech off weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support at $12 a share or near those recent double bottom support levels. One could 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.

ChemoCentryx

Another clinical-stage biopharmaceutical player that's starting to rip within range of triggering a big breakout trade is ChemoCentryx  (CCXI) , which focuses on the discovery, development and commercialization of orally administered therapeutics to treat orphan and rare diseases, autoimmune diseases, inflammatory disorders and cancer in the U.S. This stock has been destroyed by the bears over the last three months, with shares plunging lower by 69.2%.

If you take a glance at the chart for ChemoCentryx, you'll notice that this stock ripped sharply higher on Thursday right off its new 52-week low of $2.16 a share with monster upside volume flows. Volume for that trading session registered over 1.2 million shares, which is well above its three-month average action of 203,874 shares. This high-volume rip to the upside is now quickly pushing shares of ChemoCentryx 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 ChemoCentryx if it manages to break out above some near-term overhead resistance levels at $2.56 to $2.75 a share and then above its 20-day moving average of $2.89 a share to $3 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 203,874 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 its 50-day moving average of $3.34 a share to $3.50, or even $3.75 to $4 a share.

Traders can look to buy ChemoCentryx off weakness to anticipate that breakout and simply use a stop that sits right around its new 52-week low of $2.16 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.

Teligent

Another specialty generic pharmaceutical player that's starting to spike within range of triggering a big breakout trade is Teligent  (TLGT) , which develops, formulates, manufactures, and markets generic topical and branded generic injectable pharmaceutical products in the U.S. and Canada. This stock has been smashed lower by the sellers over the last six months, with shares off sharply by 27.6%.

If you take a glance at the chart for Teligent, you'll notice that this stock has been attempting to carve out a major bottoming chart pattern over the last month or so, with shares finding some buying interest at $4.53, $4.46 and $4.60 a share. Shares of Teligent spiked sharply higher on Thursday right above those potential bottom support levels with strong upside volume. Volume for that trading session registered over 620,000 shares, which is well above its three-month average action of 375,026 a shares. This high-volume spike to the upside is now quickly pushing this stock within range of triggering a big breakout trade.

Traders should now look for long-biased trades in Teligent if it manages to break out above some near-term resistance levels at $5 to $5.08 a share and then above its 20-day moving average of $5.12 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 375,026 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 around $5.50 to $5.70, or even its 50-day moving average of $5.98 to $6.35 a share.

Traders can look to buy Teligent off weakness to anticipate that breakout and simply use a stop that sits right around those recent major bottoming support levels. 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.

FutureFuel

My final breakout trading prospect is chemical player FutureFuel  (FF) , which manufactures and sells diversified chemical products, bio-based products and bio-based specialty chemical products in the U.S. and internationally. This stock has been in favor with the bulls over the last six months, with shares up by 17.6%.

If you look at the chart for FutureFuel, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest over the last three months at $11.13 to $11.17 a share. This stock trended notably higher on Thursday right above those support levels with monster upside volume flows. Volume for that trading session registered over 320,000 shares, which is well above its three-month average action of 97,800 shares. This high-volume spike to the upside is now quickly pushing this stock within range of triggering a big breakout trade.

Traders should now look for long-biased trades in FutureFuel if it manages to break out above some near-term overhead resistance levels at $12.06 to $12.34 a share and then above its 20-day moving average of $12.50 a share with volume that hits near or above its three-month average action of 97,800 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 $13 to $14, or even $14.50 to $15 a share.

Traders can look to buy shares of FutureFuel off weakness to anticipate that breakout and simply use a stop that sits right around those recent double bottom support levels. One can also buy this stock off strength once it starts to move above 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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