Stock Quotes in this Article: ACFN, SOHU, YRCW, YOKU, INVN

DELAFIELD, Wis. (Stockpickr) -- 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 that can ultimately push the stock significantly higher.

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One example of a successful breakout trade I flagged recently was trucking player YRC Worldwide (YRCW), which I featured in Dec. 12's "5 Stocks Under $10 Set to Soar" at $9.71 share. I mentioned in that piece that shares of YRCW had recently formed a triple bottom chart pattern at $7.06, $7.20 and $7.44 a share. Following that bottom, shares of YRCW were starting to reverse its downtrend and enter a new uptrend, since the stock was moving higher from its low of $7.06 to its recent high of $10.50 a share. That move was quickly pushing shares of YRCW within range of triggering a major breakout trade above some near-term overhead resistance levels at $10.63 to $10.87 a share.

Guess what happened? Shares of YRCW triggered that breakout the following trading session with monster upside volume. This stock has continued to uptrend and soar higher since taking out those key resistance levels with bullish upside volume flows. Shares of YRCW tagged a recent high on Dec. 23 of $20.58 a share. That represents a massive gain of over 100% in just a few weeks for anyone who bought this breakout. As you can see, trading breakouts that trigger with strong volume can produce monster profits in very short timeframes.

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Breakout candidates are something that I tweet about on a daily basis. I frequently tweet out 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.

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With that in mind, here's a look at four stocks that are setting up to break out and trade higher from current levels.

Acorn Energy

A technology stock that's starting to move within range of triggering a big breakout trade is Acorn Energy (ACFN), which provides digital solutions for energy infrastructure asset management. This stock has been hit hard by the sellers in 2013, with shares off sharply by 48%.

If you take a look at the chart for Acorn Energy, you'll notice that this stock has started to spike higher here back above its 50-day moving average of $3.66 a share. This stock has also found significant buying interest over the last two months, each time it has pulled back to around $3.50 to $3.20 a share. Shares of ACFN are now quickly moving within range of triggering a big breakout trade above some key near-term overhead resistance levels.

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Traders should now look for long-biased trades in ACFN if it manages to break out above some key near-term overhead resistance levels at $4.24 to $4.64 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 344,835 shares. If that breakout triggers soon, then ACFN will set up to re-test or possibly take out its next major overhead resistance levels at $5.50 to $6 a share. Any high-volume move above $6 will then put its next major overhead resistance levels at its 200-day moving average of $6.35 to $6.68 a share into range for shares of ACFN.

Traders can look to buy ACFN off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $3.66 a share, or right around some major support at $3.21 a share. One could also buy ACFN 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.

Sohu.com

One Internet gaming player that's starting to trend within range of triggering a near-term breakout trade is Sohu.com (SOHU), which is a Chinese online media, search, gaming, community and mobile service group. This stock has been in play with the bulls so far in 2013, with shares up sharply by 51%.

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If you take a look at the chart for Sohu.com, you'll notice that this stock has been uptrending strong over the last two months, with shares moving higher from its low of $60.01 to its recent high of $73.28 a share. During that uptrend, shares of SOHU have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SOHU within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in SOHU if it manages to break out above some near-term overhead resistance levels at $73.28 a share to its gap down day high from October at $75.48 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 1.26 million shares. If that breakout triggers soon, then SOHU will set up to re-fill some of its previous gap down zone from October that started near $83 a share.

Traders can look to buy SOHU off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $68.84 a share, or near more support at $67.50 a share. One can also buy SOHU 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.

InvenSense

Another technology player that's starting to move within range of triggering a near-term breakout trade is InvenSense (INVN), which designs, develops, markets, and sells micro-electro-mechanical system gyroscopes for motion tracking devices in consumer electronics. This stock has been red hot in 2013, with shares up huge by 63%.

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If you look at the chart for InvenSense, you'll notice that this stock has been trending sideways and consolidating for the last two months, with shares moving between $15.20 on the downside and $18.31 on the upside. Shares of INVN have now started to spike higher back above its 50-day moving average of $17.41 a share. That move is quickly pushing shares of INVN within range of triggering a near-term breakout trade above the upper-end of its recent sideways trading chart pattern.

Traders should now look for long-biased trades in INVN if it manages to break out above some near-term overhead resistance at $18.31 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average volume of 2.32 million shares. If that breakout hits soon, then INVN will set up to re-test or possibly take out its next major overhead resistance levels at $21.82 to its all-time high at $22.35 a share. Any high-volume move above those levels will then give INVN a chance to tag $25 to $30 a share.

Traders can look to buy INVN off any weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $16.42 a share to its 200-day moving average of $15.25 a share. One can also buy INVN off strength once it starts to take $18.31 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Youku Tudou

My final breakout trading prospect is technology player Youku Tudou (YOKU), an Internet television company in China. This stock has been crazy strong in 2013, with shares up a whopping 71%.

If you look at the chart for Youku Tudou, you'll notice that this stock has been uptrending strong for the last six months, with shares soaring higher from its low of $17.90 a share to its recent high of $32.30 a share. During that uptrend, shares of YOKU have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of YOKU within range of triggering a major breakout trade.

Traders should now look for long-biased trades in YOKU if it manages to break out above its 52-week high at $32.30 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 3.83 million shares. If that breakout triggers soon, then YOKU will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45 a share.

Traders can look to buy YOKU off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $28.57 a share to more support at $27.95 a share. One can also buy YOKU off strength once it starts to take out $32.30 a share with volume and then simply use a stop that sits a conformable percentage from your entry point.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.