5 Breakout Stocks to Buy for Big Gains

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.

Ctrip.com

One services player that's starting to trend within range of triggering a big breakout trade is Ctrip.com  (CTRP) , which provides travel service for accommodation reservation, transportation ticketing, packaged tours and corporate travel management in the People's Republic of China. This stock is up modestly over the last six months, with shares higher by 4.4%.

If you take a look at the chart for Ctrip.com, you'll notice that this stock has been uptrending over the last two months, with shares moving higher off its low of $37.36 a share to its recent high of $44.12 a share. During that uptrend, shares of Ctrip.com have been making mostly higher lows and higher highs, which is bullish technical price action. This strong uptrend has now pushed this stock within range of triggering a big breakout trade above a key downtrend line that dates back to May.

Traders should now look for long-biased trades in Ctrip.com if it manages to break out above that downtrend line which will trigger over some near-term resistance levels at $43.06 to $44.12 a share and then above its 200-day moving average of $44.24 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 4.72 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 $46.67 to $49.33, or even $52 to $55 a share.

Traders can look to buy Ctrip.com off weakness to anticipate that breakout and simply use a stop that sits right around some near-term support levels at $41 to $40 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.

Contango Oil & Gas

A independent oil and natural gas player that's starting to move within range of triggering a big breakout trade is Contango Oil & Gas  (MCF) , which acquires, explores, develops, exploits and produces crude oil and natural gas properties in the offshore shallow waters of the Gulf of Mexico, and in the onshore Texas Gulf Coast and Rocky Mountain regions in the U.S. This stock has been in play with the bulls over the last six months, with shares ripping higher by 48.1%.

If you take a glance at the chart for Contango Oil & Gas, you'll notice that this stock spiked sharply higher on Thursday back above its 200-day moving average of $9.25 a share with strong upside volume flows. Volume for that trading session registered over 645,000 shares, which is well above its three-month average action of 242,675 a shares. This high-volume rip to the upside is now quickly pushing shares of Contango Oil & Gas within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trade in Contango Oil & Gas if it manages to breakout above Thursday's intraday high of $9.75 a share and then above its gap-down-day high from July at $10.20 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 242,675 shares. If that breakout fires off soon, then this stock will set up to re-fill some of its previous gap-down-day zone that started at $12.75 a share.

Traders can look to buy Contango Oil & Gas off weakness to anticipate that breakout and simply use a stop that sits right below $9 a share or around $8.50 a share. One could 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.

NGL Energy Partners

Another energy player that's starting to trend within range of triggering a near-term breakout trade is NGL Energy Partners  (NGL) , which engages in the crude oil logistics, water solutions, liquids, retail propane and refined products and renewables businesses in the U.S. This stock has been on fire over the last six months, with shares soaring higher by 82.6%.

If you take a glance at the chart of NGL Energy Partners, you'll notice that this stock spiked notably higher on Thursday right above some previous support at $16.61 a share and back above both its 50-day moving average of $17.91 a share and its 20-day moving average of $18.39 a share with decent upside volume flows. This jump to the upside is now quickly pushing shares of NGL Energy Partners within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in NGL Energy Partners if it manages to break out above some near-term overhead resistance levels at $19.02 to $19.49 a share and then above more resistance at $19.62 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 1.09 million 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 $20.50 to $21.73, or even $24 to $26 a share.

Traders can look to buy NGL Energy Partners off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $17.91 a share or near some previous support at $16.61 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.

Perion Network

Another technology player that's starting to rip within range of triggering a big breakout trade is Perion Network  (PERI) , which delivers advertising solutions to brands, advertising agencies and publishers in North America, Europe and internationally. This stock has been smacked lower by the sellers over the last six months, with shares off sharply by 38.9%.

If you take a glance at the chart for Perion Network, you'll notice that this stock has been uptrending strong over the last two months, with shares ripping higher off its new 52-week low of $1.01 a share to its recent high of $1.49 a share. During that uptrend, shares of Perion Network have been consistently making higher lows and higher highs, which is bullish technical price action. This strong move has now pushed this stock within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Perion Network if it manages to break out above Thursday's intraday high of $1.45 a share and then once it clears more near-term overhead resistance at $1.49 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 200,141 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 $1.81 to $1.86, or even its 200-day moving average of $2.01 to $2.20 a share.

Traders can look to buy Perion Network off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $1.25 a share or around its 50-day moving average of $1.22 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.

Dynavax Technologies

My final breakout trading prospect is clinical-stage biopharmaceutical player Dynavax Technologies  (DVAX) , which discovers and develops novel vaccines and therapeutics in the U.S. This stock has been under heavy selling pressure over the last six months, with shares off sharply by 27.4%.

If you look at the chart for Dynavax Technologies, you'll notice that this stock has been uptrending over the last two months, with shares moving higher off its new 52-week low of $12.84 a share to its recent high of $16.19 a share. During that uptrend, shares of Dynavax Technologies have been making mostly higher lows and higher highs, which is bullish technical price action. This move has now pushed this stock within range of triggering a big breakout trade above a key downtrend line that dates back to May.

Traders should now look for long-biased trades in Dynavax Technologies if it manages to break out above that key downtrend line that will trigger over some near-term overhead resistance levels at $16.19 to $17 a share and then above more resistance at $17.14 a share with volume that hits near or above its three-month average action of 565,216 shares. If that breakout develops soon, then this stock will set up to re-test or possibly take out its next major overhead resistance at $19 a share. Any high-volume move above $19 will then give this stock a chance to re-fill some of its previous gap-down-day zone from April that started near $22 a share.

Traders can look to buy shares of Dynavax Technologies off weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support levels at $15.11 to $14.70 a share or around more major support at $14.16 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 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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