These 5 Stocks Are Poised for Breakouts

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 to my subscribers 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.

pdvWireless

One technology player that's starting to spike within range of triggering a near-term breakout trade is pdvWireless  (PDVW) , which operates as a private wireless communications carrier and provider of mobile workforce communication and location based solutions in the U.S. This stock has been smacked lower by the sellers over the last six months, with shares off by 24.3%.

If you take a look at the chart for pdvWireless, you'll notice that this stock has been downtrending badly over the last two months, with shares collapsing off its high of $43.04 a share to its new 52-week low of $18.60 a share. During that downtrend, this stock has been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of pdvWireless ripped higher on Thursday right above some near-tem support at $19 a share with strong volume. Volume on Thursday registered over 132,000 shares, which is well above its three-month average action of 93,036 shares. This high-volume spike is now quickly pushing this stock within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in pdvWireless if it manages to break out above some near-term overhead resistance levels at $22 to $23 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 93,036 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 $24 to its 20-day moving average of $25.29, or even $27 to its 200-day moving average of $29.19 a share.

Traders can look to buy pdvWireless off weakness to anticipate that breakout and simply use a stop that sits right around some near-term support at $19 a share or near its new 52-week low of $18.60 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.

NewLink Genetics

A biopharmaceutical player that's starting to trend within range of triggering a big breakout trade is NewLink Genetics  (NLNK) , which focuses on discovering, developing and commercializing immunotherapeutic products to enhance treatment options for patients with cancer. This stock had been destroyed by the bears over the last six months, with shares down big by 70.7%.

If you take a glance at the chart for NewLink Genetics, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $9.76 to $9.84 a share. Following that potential bottom, this stock has now started to spike higher off those support levels, and it's quickly trending within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trade in NewLink Genetics if it manages to break out above some near-term overhead resistance levels at Thursday's intraday high of $10.69 a share and then once it clears its 20-day moving average of $11.14 a share to $11.55 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 713,572 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 to $12.65 or even $13 a share. Any high-volume above $13 a share will then give this stock a chance to re-fill some of its previous gap-down-day zone from May that started at $16.75 a share.

Traders can look to buy NewLink Genetics off weakness to anticipate that breakout and simply use a stop that sits right below those recent double bottom support levels, or near its new 52-week low of $9.23 a share. 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.

Fossil Group

Another consumer goods player that's starting to trend within range of triggering a big breakout trade is Fossil Group  (FOSL)  which designs, develops, markets and distributes consumer fashion accessories. This stock has been smashed lower by the bears over the last six months, with shares off sharply by 35.3%.

If you take a glance at the chart of Fossil Group, you'll notice that this stock spiked modestly higher on Thursday right off its 20-day moving average of $27.95 a share with decent upside volume flows. This move to the upside is now quickly pushing shares of Fossil Group within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Fossil Group if it manages to break out above some near-term overhead resistance levels at $29.40 to $29.84 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 1.3 million shares. If that breakout develops soon, then this stock will set up to re-fill some of its previous gap-down-day zone from May that started near $40 a share.

Traders can look to buy Fossil Group off weakness to anticipate that breakout and simply use a stop that sits right around some near-term support levels at $27 a share or near its new 52-week low of $26.42 a share. 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 comfortable percentage from your entry point.

Natural Grocers by Vitamin Cottage

Another grocery stores player that's starting to trend within range of triggering a big breakout trade is Natural Grocers by Vitamin Cottage  (NGVC) , which operates natural and organic groceries, and dietary supplement retail stores in the U.S. This stock has been hit hard by the bears over the last six months, with shares falling sharply by 35.8%.

If you take a glance at the chart for Natural Grocers by Vitamin Cottage, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $12.71 to $12.75 a share over the last two months. Following that potential bottom, shares of Natural Grocers by Vitamin Cottage have now started to spike higher off those support levels, and it's quickly moving within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Natural Grocers by Vitamin Cottage if it manages to break out above its 20-day moving average of $13.55 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 130,020 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 $14 to $14.18 a share. Any high-volume move above $14.18 will then give this stock a chance to make a run at its gap-down-day high from April just above $16 a share.

Traders can look to buy Natural Grocers by Vitamin Cottage 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 trend back above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

AtriCure

My final breakout trading prospect is medical device player AtriCure  (ATRC) , which provides atrial fibrillation solutions to hospitals and medical centers in the U.S. and internationally. This stock has been under selling pressure over the last six months, with shares off sharply by 28%.

If you look at the chart for AtriCure, you'll notice that this stock has been uptrending over the last month and change, with shares moving higher off its new 52-week low of $13.44 a share to its recent high of $16.25 a share. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action. That uptrend is now quickly pushing shares of AtriCure within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in AtriCure if it manages to break out above some near-term overhead resistance levels at $16 to $16.25 a share with volume that hits near or above its three-month average action of 280,194 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 $18.03 to its 200-day moving average of $18.62, or even $19.15 to $19.50 a share.

Traders can look to buy shares of AtriCure off weakness to anticipate that breakout and simply use a stop that sits right around some near-term support levels at $14.87 to $14.37 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 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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