5 Stocks Setting Up for Big 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.

Novavax

One clinical-stage vaccine player that's starting to spike within range of triggering a big breakout trade is Novavax (NVAX) , which focuses on discovering, developing, and commercializing recombinant nanoparticle vaccines and adjuvants. This stock has been destroyed by the sellers over the last six months, with shares collapsing by 81.5%.

If you take a look at the chart for Novavax, you'll notice that this stock recently formed a double bottom chart pattern, after shares found some buying interest at $1.17 to $1.20 a share over the last month. Following that potential bottom, shares of Novavax have now started to spike higher and the stock is beginning to flirt with both its 20-day moving average of $1.35 a share and its 50-day moving average of $1.36 a share. That spike is now quickly pushing this stock within range of triggering a big breakout trade.

Traders should now look for long-biased trades in Novavax if it manages to break out above some near-term overhead resistance levels at $1.40 to $1.47 a share and then above more resistance at $1.54 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 8.60 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 $1.70 to $1.93, or even $2.17 to $2.50 a share.

Traders can look to buy Novavax off weakness to anticipate that breakout and simply use a stop that sits right below $1.30 a share or around $1.20 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.

Uniqure NV

A biopharmaceutical player that's starting to trend within range of triggering a near-term breakout trade in Uniqure NV (QURE) , which engages in the discovery, development, and commercialization of gene therapies in the Netherlands. This stock has been under notable selling pressure over the last six months, with shares falling by 20.6%.

If you take a glance at the chart for Uniqure NV, you'll notice that this stock recently formed a triple bottom chart pattern, after shares found some buying interest at $5.45, $5.51 and $5.50 a share over the last month. Following that potential bottom, shares of Uniqure NV have now started to spike a bit higher and trend back above its 20-day moving average of $5.85 a share. That jump to the upside 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 trade in Uniqure NV if it manages to break out above some near-term overhead resistance levels at $6.32 to $6.43 a share and then above its 50-day moving average of $6.44 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 287,805 shares. If that breakout takes hold soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $6.75 to $7, or even $7.50 to $8.30 a share.

Traders can look to buy Uniqure NV off weakness to anticipate that breakout and simply use a stop that sits right below its 20-day moving average of $5.85 a share or around those recent triple bottom support levels. 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.

Alnylam Pharmaceuticals

Another biopharmaceutical player that's starting to spike within range of triggering a near-term breakout trade is Alnylam Pharmaceuticals (ALNY) , which discovers, develops, and commercializes novel therapeutics based on RNA interference. This stock has been hit hard by the bears over the last six months, with shares dropping large by 29.2%.

If you take a glance at the chart of Alnylam Pharmaceuticals, you'll notice that this stock has been uptrending a bit over the last few weeks, with shares moving higher off its low of $37.05 a share to its intraday high on Friday of $43.22 a share. During that uptrend, shares of Alnylam Pharmaceuticals have been making mostly higher lows and higher highs, which is bullish technical price action. That uptrend is now starting to push 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 Alnylam Pharmaceuticals if it manages to break out above some near-term overhead resistance levels at $43.22 to $45.07 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 1.83 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 $47.50 to $48.44, or even $50 to around $53 a share.

Traders can look to buy Alnylam Pharmaceuticals off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $40 or $39 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.

Penumbra

Another medical equipment player that's starting to trend within range of triggering a big breakout trade is Penumbra (PEN) , which designs, develops, manufactures, and markets medical devices in the U.S., Europe, Canada, Australia, Japan, and internationally. This stock has been in play with the bulls over the last six months, with shares rising by 13.6%.

If you take a glance at the chart for Penumbra, you'll notice that this stock is spiking notably higher on Friday right off its 20-day moving average of $65.08 a share and right above its 50-day moving average of $64.54 a share with decent upside volume flows. This jump to the upside is now quickly pushing shares of Penumbra within range of triggering a big breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Penumbra if it manages to break out above Friday's intraday high of $68.20 a share and then once it clears some key overhead resistance at $69.20 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 215,492 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 $72 to $75, or even $77 to $79.50 a share.

Traders can look to buy Penumbra off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $64.54 a share or around its 200-day moving average of $62.82 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.

MacroGenics

My final breakout trading prospect is biopharmaceutical player MacroGenics (MGNX) , which focuses on discovering and developing antibody-based therapeutics for the treatment of cancer primarily by modulating the human immune system, as well as various autoimmune disorders and infectious diseases. This stock has been under heavy selling pressure over the last three months, with shares moving sharply lower by 29.9%.

If you look at the chart for MacroGenics, you'll notice that this stock has been uptrending a bit over the last few weeks, with shares moving higher off its recent low of $18.22 a share to its intraday high on Friday of $21 a share. During that uptrend, shares of MacroGenics have been making mostly higher lows and higher highs, which is bullish technical price action. That spike to the upside 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 MacroGenics if it manages to break out above its 20-day moving average of $21 a share with volume that hits near or above its three-month average action of 291,676 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 $23 to its 50-day moving average of $24.06 a share, or even its 200-day moving average of $25.49 a share to $27 a share.

Traders can look to buy shares of MacroGenics off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $19.50 a share or around its recent low of $18.22 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 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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