5 Stocks to Trade for Big Breakout 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.

Avinger

One commercial-stage medical device player that's starting to spike within range of triggering a big breakout trade is Avinger  (AVGR) , which designs, manufactures and sells image-guided and catheter-based systems used by physicians to treat patients with peripheral arterial disease in the U.S. and Europe. This stock has been under heavy selling pressure over the last six months, with shares off sharply by 43.6%.

If you take a look at the chart for Avinger, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $4 to $4.12 a share over the last month. Following that potential bottom, shares of Avinger have now started to uptrend and move back above both its 20-day moving average of $4.38 a share and its 50-day moving average of $4.72 a share. that uptrend is now quickly pushing shares of Avinger within range of triggering a big breakout trade.

Traders should now look for long-biased trades in Avinger if it manages to break out above Thursday's intraday high of $4.96 a share and then above some near-term overhead resistance at around $5 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 374,912 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 near $5.50 to $6.16, or even $6.50 a share.

Traders can look to buy Avinger off weakness to anticipate that breakout and simply use a stop that sits right below its 20-day moving average of $4.38 a share or near those recent double bottom support levels. 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.

Cellular Biomedicine Group

A biomedicine player that's starting to trend within range of triggering a big breakout trade is Cellular Biomedicine Group  (CBMG) , which develops stem cell therapies for degenerative diseases and cancerous diseases in Greater China. This stock has sold off notably over the last six months, with shares down by 11.7%.

If you take a glance at the chart for Cellular Biomedicine Group, you'll notice that this stock spiked notably higher on Thursday right off its 50-day moving average of $14.25 a share with strong upside volume flows. Volume for that trading session registered over 90,000 shares, which is well above its three-month average action of 31,931 shares. This high-volume spike to the upside is now quickly pushing shares of Cellular Biomedicine Group 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 trade in Cellular Biomedicine Group if it manages to clear that downtrend line which will trigger over $15 to $15.50 a share and then above $15.70 to $15.95 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 31,931 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 $16.39 to $17.50, or even $19 to $20 a share.

Traders can look to buy Cellular Biomedicine Group off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $14.25 a share or around some near-term support at $13.85 a share. One could 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.

Golden Star Resources

A basic materials player that's starting to move within range of triggering a big breakout trade is Golden Star Resources  (GSS) , which operates as a gold mining and exploration company. This stock has been on fire over the last six months, with shares exploding higher by 74.7%.

If you take a glance at the chart of Golden Star Resources, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at 67 to 70 cents per share over the last month. Following that potential bottom, shares of Golden Star Resources have now started to spike higher back above its 20-day moving average of 73 cents per share and right into its 50-day moving average of 78 cents per share. That spike is now quickly pushing 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 Golden Star Resources if it manages to break out above some near-term overhead resistance levels at 80 to 82 cents per share and then above more resistance at 83 cents per 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 3.55 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 95 cents to $1.02, or even its 52-week high of $1.13 a share.

Traders can look to buy Golden Star Resources off weakness to anticipate that breakout and simply use a stop that sits just below its 20-day moving average of 73 cents per share or 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 comfortable percentage from your entry point.

Myriad Genetics

Another personalized medicine player that's starting to spike within range of triggering a major breakout trade is Myriad Genetics  (MYGN) , which focuses on the development and marketing of predictive, personalized and prognostic medicine tests worldwide. This stock has been smacked hard by the sellers over the last six months, with falling sharply lower by 42.1%.

If you take a glance at the chart for Myriad Genetics, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $19.91 to $20.22 a share over the last month. Following that potential bottom, this stock has now started to spike higher right off its 20-day moving average of $20.82 a share with decent upside volume flows. This spike is now quickly pushing shares of Myriad Genetics within range of triggering a major breakout trade that could send the stock into a massive gap lower from early August.

Traders should now look for long-biased trades in Myriad Genetics if it manages to break out above Thursday's intraday high of $21.55 a share and then once it clears some more near-term overhead resistance at $22.40 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 1.70 million shares. If that breakout materializes soon, then this stock will set up to re-fill some of its previous gap-down-day zone from early August that started just over $30 a share.

Traders can look to buy Myriad Genetics off weakness to anticipate that breakout and simply use a stop that sits just below those recent double bottom support levels, or near its new 52-week low of $19.10 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.

Tetraphase Pharmaceuticals

My final breakout trading prospect is clinical-stage biopharmaceutical player Tetraphase Pharmaceuticals  (TTPH) , which develops various antibiotics for the treatment of serious and life-threatening multidrug-resistant infections. This stock has been under notable selling pressure over the last six months, with shares off by 9.1%.

If you look at the chart for Tetraphase Pharmaceuticals, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $3.62 a share over the last four months. Following that potential bottom, this stock has now started to spike higher back above its 20-day moving average of $3.80 a share. That spike to the upside is now quickly pushing shares of Tetraphase Pharmaceuticals within range of triggering a big breakout trade above a key downtrend line that dates back to July.

Traders should now look for long-biased trades in Tetraphase Pharmaceuticals if it manages to clear that downtrend line which will trigger above Thursday's intraday high of $3.88 a share and then above its 50-day moving average of $3.96 a share to more resistance at $4.01 to $4.10 a share with volume that hits near or above its three-month average action of 422,802 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 $4.28 to $4.33, or even $4.65 to around $5 a share.

Traders can look to buy shares of Tetraphase Pharmaceuticals 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 clear those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

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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