These 5 Stocks Are Breaking Out

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.

aTyr Pharma

One biotechnology player that's starting to trend within range of triggering a big breakout trade is aTyr Pharma  (LIFE) , which engages in the discovery and clinical development of Physiocrine-based therapeutics for patients suffering from severe and rare diseases. This stock has trended down notably over the last six months, with shares sliding lower by 15.2%.

If you take a look at the chart for aTyr Pharma, you'll notice that this stock ripped sharply higher on Thursday right off its 50-day moving average of $2.97 a share and back above its 20-day moving average of $3.05 a share with decent upside volume flows. This sharp spike to the upside is now quickly pushing shares of aTyr Pharma within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in aTyr Pharma if it manages to break out above Thursday's intraday high of $3.25 a share and then above more near-term overhead resistance at $3.42 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 233,164 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 $3.72 to $4, or even $4.20 to $4.36 a share.

Traders can look to buy aTyr Pharma off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $2.93 to $2.85 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 destroyed by the bears over the last six months, with shares collapsing lower by 60.7%.

If you take a glance at the chart for Seres Therapeutics, you'll notice that this stock recently gapped-down sharply lower from $35.98 a share to its new 52-week low of $8.05 a share with monster downside volume flows. Following that crash, this stock has now started to stabilize a bit, with shares moving between $8.92 on the downside and $10.08 on the upside. Shares of Seres Therapeutics spiked sharply higher on Thursday off that $8.92 low with strong upside volume flows. Volume for that trading session registered over 1.23 million shares, which is just above its three-month average action of 1.09 million 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 Seres Therapeutics if it manages to break out above Thursday's intraday high of $9.82 a share and then once it clears more key resistance at $10.08 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 develops soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $11.18 to its gap-down-day high of $12.35 a share.

Traders can look to buy Seres Therapeutics off weakness to anticipate that breakout and simply use a stop that sits right below Thursday's intraday low of $8.92 a share. One could 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.

Dorian LPG

An energy player that's starting to move within range of triggering a near-term breakout trade is Dorian LPG  (LPG) , which operates as a liquefied petroleum gas shipping company worldwide. This stock has been smacked lower by the sellers over the last six months, with shares dropping sharply lower by 33.3%.

If you take a glance at the chart of Dorian LPG, you'll notice that this stock has been downtrending badly over the last six months, with shares falling sharply lower off its high of around $12 a share to its new 52-week low of $5.66 a share. During that downtrend, shares of Dorian LPG have been making mostly lower highs and lower lows, which is bearish technical price action. That said, this stock has now started to rebound off that $5.66 low, and it's beginning to trend within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in Dorian LPG if it manages to break out above its 20-day moving average of $6.41 a share and then above more near-term overhead resistance levels at $6.45 to $6.75 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 280,564 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 $7.16 a share to $7.60, or even $7.75 to $8 a share.

Traders can look to buy Dorian LPG off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $5.83 to $5.66 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.

ManpowerGroup

Another stock that's starting to trend within range of triggering a big breakout trade is ManpowerGroup  (MAN) , which provides workforce solutions and services in the Americas, Southern Europe, Northern Europe and the Asia Pacific Middle East region. This stock has been under notable selling pressure over the last three months, with shares moving lower by 9%.

If you take a glance at the chart for ManpowerGroup, 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 $57.26 a share to its recent high of $71.18 a share. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action. This strong trend is now quickly pushing shares of ManpowerGroup within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in ManpowerGroup if it manages to break out above Thursday's intraday high of $70.39 a share to $71.18 a share and then above its gap-down-day high from June at $72.53 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 971,038 shares. If that breakout takes hold soon, then this stock will set up to re-fill some of its previous gap-down-day zone from June that started at $77.57 a share.

Traders can look to buy ManpowerGroup off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $68 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.

Navistar International

My final breakout trading prospect is industrial player Navistar International  (NAV) , which manufactures and sells commercial and military trucks, diesel engines and school and commercial buses; and provides service parts for trucks and diesel engines worldwide. This stock has been red hot with the bulls over the last six months, with shares exploding higher by 95.8%.

If you look at the chart for Navistar International, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $11.57 to $11.59 a share. Following that potential bottom, this stock has now started to rip higher and trend back above both its 50-day moving average of $12.36 a share and its 20-day moving average of $12.55 a share. This strong bounce off those support levels is now quickly pushing shares of Navistar International within range of triggering a big breakout trade.

Traders should now look for long-biased trades in Navistar International if it manages to break out above some near-term overhead resistance levels at $13.69 to $14 a share with volume that hits near or above its three-month average action of 1.27 million 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 $15.77 to $16.39, or even $16.62 to its 52-week high of $19.91 a share.

Traders can look to buy shares of Navistar International off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day moving average of $12.36 a share or near 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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