5 Stocks Poised for Major 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, it's free to find new buyers and momentum players which can ultimately push the stock significantly higher.

Breakout candidates are ones that I tweet about on a daily basis. These are also the exact type of stocks I love to trade.

I frequently flag high-probability setups, which are breakout plays and stocks that are acting technically bullish. These are the ones that often make monster moves to the upside. What's great about breakout trading is that you only focus on trends, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.

Trading breakouts are 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, 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.

ANI Pharmaceuticals

One healthcare player that's starting to spike within range of triggering a near-term breakout trade is ANI Pharmaceuticals (ANIP) , which develops, manufactures, and markets branded and generic prescription pharmaceuticals in the U.S. This stock has been acting decent over the last six months, with shares moving higher by 9.2%.

If you take a look at the chart for ANI Pharmaceuticals, you'll notice that this stock recently formed a double-bottom chart pattern, after shares found some buying interest at $55.44 to $56.10 a share over the last month or so. Following that potential bottom, shares of ANI Pharmaceuticals have now started to trend back above both its 20-day moving average of $58.91 a share and its 50-day moving average of $60.49 a share. That uptrend is now quickly pushing this stock within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in ANI Pharmaceuticals if it manages to break out above some near-term overhead resistance levels at $61.43 to $62.10 a share and then above more key resistance at $63 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 175,495 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 $66 to $67.50, or even $70 to its 52-week high of $70.92 a share. Any high-volume move above $70.92 a share will then give this stock a chance to make a run at $75 to $80 a share.

Traders can look to buy ANI Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right around its 200-day moving average of $55.07 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.

Enbridge

A energy player that's starting to trend within range of triggering a near-term breakout trade is Enbridge  (ENB) , which operates as an energy transportation and distribution company in the U.S. and Canada. This stock has been in favor with the bulls over the last six months, with shares moving higher by 8.2%.

If you take a glance at the chart for Enbridge, you'll notice that this stock has just started to trend back above both its 20-day moving average of $42.30 a share and its 50-day moving average of $42.45 a share. This stock also recently formed a double-bottom chart, after shares found some buying interest at $41.30 to $41.35 a share. Shares of Enbridge are now starting to trend within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trade in Enbridge if it manages to break out above some near-term overhead resistance levels at $43 to $43.72 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 2.33 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 $44.67 to $45.34, or even its 52-week high of $45.77 a share. Any high-volume move above $45.77 will then give this stock a chance to make a run at $50 to $55 a share.

Traders can look to buy Enbridge off weakness to anticipate that breakout and simply use a stop that sits right below those recent double bottom support levels, or around its 200-day moving average of $40.76 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.

Zoe's Kitchen

Another restaurants player that's starting to trend within range of triggering a big breakout trade is Zoe's Kitchen (ZOES) , which develops and operates a chain of fast-casual restaurants. This stock has been hit by the sellers over the last six months, with shares falling sharply by 29.6%.

If you take a glance at the chart of Zoe's Kitchen, you'll notice that this stock has been uptrending over the last three months, with shares moving higher off its new 52-week low of $20.20 a share to its recent high of $26.78 a share. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action. That uptrend has now pushed this stock back above both its 50-day moving average of $23.49 a share and its 20-day moving average of $25.36 a share. That move is now quickly pushing shares of Zoe's Kitchen within range of triggering a big breakout trade.

Traders should now look for long-biased trades in Zoe's Kitchen if it manages to break out above some near-term overhead resistance levels at $26.78 to $28 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 675,444 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 $30 to $31, or even its 200-day moving average of $31.96 a share. Any high-volume move above $31.96 will then give this stock a chance to re-fill some of its previous gap-down-day zone from August that started at $37.70 a share.

Traders can look to buy Zoe's Kitchen off weakness to anticipate that breakout and simply use a stop that sits right below its 20-day moving average of $25.36 a share, or around its 50-day moving average of $23.49 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.

Tesla Motors

Another auto maker that's starting to spike within range of triggering a big breakout trade is Tesla Motors   (TSLA) , which designs, develops, manufactures, and sells electric vehicles and stationary energy storage products in the U.S., China, Norway, and internationally. This stock has been under modest selling pressure over the last six months, with shares off by 7.3%.

If you take a glance at the chart for Tesla Motors, you'll notice that this stock recently formed a double-bottom chart pattern, after shares found some buying interest at $178.19 to $180 a share over the last two months. Following that potential bottom, shares of Tesla Motors have now started to uptrend and move back above both its 20-day moving average of $191.41 a share and its 50-day moving average of $193.51 a share. That uptrend 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 Tesla Motors if it manages to break out above some near-term overhead resistance levels at $203 to $205 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 4.13 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 $213.70 to its 200-day moving average of $214.50, or even $216 to $225 a share.

Traders can look to buy Tesla Motors off weakness to anticipate that breakout and simply use a stop that sits right around either its 50-day moving average of $193.51 a share or its 20-day moving average of $191.41 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.

58.com

My final breakout trading prospect is technology player 58.com  (WUBA) , which operates an online marketplace for local merchants and consumers in the People's Republic of China. This stock has been smacked lower by the bears over the last six months, with shares dropping sharply by 30.9%.

If you look at the chart for 58.com, you'll notice that this stock recently gapped-down sharply lower from around $41 a share to $33 a share with monster downside volume flows. Following that move, this stock went on to form a double bottom chart pattern, after shares found some buying interest at $30.14 to $30.25 a share over the last few weeks. Shares of 58.com have now started to spike a bit higher off those double bottom support levels, and it's now beginning to trend within range of triggering a big breakout trade.

Traders should now look for long-biased trades in 58.com if it manages to break out above some near-term overhead resistance levels at $33 to $33.89 a share with volume that hits near or above its three-month average action of 1.40 million 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 $34.98 to its gap-down-day high from November around $36 a share. Any high-volume move above $36 will then give this stock a chance to re-fill some of its previous gap-down-day zone that started near $41 a share.

Traders can look to buy shares of 58.com off weakness to anticipate that breakout and simply use a stop that sits right below those recent double bottom support levels. 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 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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