Editors' pick: Originally published March 10.
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 who 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 and alert.
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.
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.
If you take a look at the chart for BioSpecifics Technologies (BSTC) , you'll notice that this stock has been uptrending over the last month and change, with shares moving higher off its low of $48.75 to its recent high of $54.89. During that uptrend, this stock has been making mostly higher lows and higher highs, which is bullish technical price action. This uptrend is now pushing this stock within range of triggering a near-term breakout trade.
Traders should now look for long-biased trades in BioSpecifics Technologies if it manages to break out above some near-term resistance levels at $54 to $55 with strong volume. Look for a sustained move above those levels with volume that hits near or above its three-month average of 28,463 shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major resistance levels at its 52-week high of $58.21 to $63.19 a share.