Stock Quotes in this Article: JCP, LPHI, MVG, YGE, TRIP, VNTV

WINDERMERE, Fla. (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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An example of a recent successful breakout trade is insurance player Life Partners Holdings (LPHI), which I featured in Dec. 04's "3 Under-$3 Stocks Making Major Upside Moves." I mentioned in that piece that LPHI was starting to bounce off its 200-day moving average with light volume. That action was quickly pushing shares of LPHI within range of triggering a major breakout trade above some near-term overhead resistance levels at $2.73 to $2.78 a share.

Guess what happened? Shares of LPHI didn't wait long to trigger that breakout, since the stock busted through those key overhead resistance levels the following day with decent volume. Shares of LPHI have hit an intraday high of $3.27 today and the stock is still on course to tag its next major overhead resistance level at $4.12 a share. As LPHI has trended higher, another bullish technical event has triggered, since its 50-day moving average is now sweeping above its 200-day moving average.

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 five stocks that are setting up to break out and trade higher from current levels.

J.C. Penney

One name that's trending very close to triggering a near-term breakout trade is J.C. Penney (JCP), which business consists of selling merchandise and services to consumers through its department stores and through its Internet Website at jcp.com. The sellers have been in control of this stock in 2012, with shares down by 48%.

If you take a look at the chart for J.C. Penney, you'll notice that this stock crashed in off its October high of $27 to its recent low of $15.69 a share. During that move, shares of JCP were consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of JCP have now started to rebound and trend up, with shares making higher highs and higher lows during the past few weeks. This move has now pushed JCP within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in JCP once it manages to break out above some near-term overhead resistance at $19.14 a share with high volume. Look for a sustained move or close above $19.14 a share with volume that registers near or above its three-month average action of 9,323,810 shares. If that breakout triggers soon, then JCP will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day of $21.84 to $23 a share.

Traders can look to buy JCP off any weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $17.10 to $16.94 a share. One could also just buy JCP off strength once it takes out $19.14 a share with volume and then use a stop that sits a few percentage points below that level.

TripAdvisor

Another stock that's just starting to flirt with a major breakout trade is TripAdvisor (TRIP), which is an online travel company, empowering users to plan and have the perfect trip. This stock has been off to a hot start so far in 2012, with shares up a whopping 56%.

If you take a look at the chart for TripAdvisor, you'll see that this stock has been trending sideways for the last month, with shares moving between $34 on the downside and $39.32 on the upside. Just today, shares of TRIP have started to flirt with breaking out above the top-end of that range, since the stock has hit an intraday high of $39.69 a share. This action could be setting up for TRIP to trend higher and continue to break out from here.

Market players should now look for long-biased trades in TRIP as long as it's trending above $39.07 to $39.69 a share with strong upside volume flows. I would consider any upside volume day that registers near or above its three-month average action of 2,722,940 shares. If TRIP can maintain that trend, then this stock will set up to re-fill its previous gap down zone from July that started near $46 a share.

Yingli Green Energy

One name that's starting to move within range of triggering a major breakout trade is Yingli Green Energy (YGE), which is engaged in the design, development, marketing, manufacturing and installation and sale of photovoltaic products in the People's Republic of China and overseas markets. This stock has been hammered by the sellers so far in 2012, with shares off by over 50%.

If you look at the chart for Yingli Green Energy, you'll notice that this stock is just starting to trend back above and bounce right off its 50-day moving average of $1.65 a share. This move is quickly pushing shares of YGE within range of triggering a major breakout trade.

Market players should now look for long-biased trades in YGE once it manages to break out above some near-term overhead resistance levels at $1.88 to $1.90 a share and then above more overhead resistance at $2.18 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 963,395 shares. If that breakout triggers soon, then YGE will set up to re-test or possibly take its next major overhead resistance levels at $2.52 to $3 a share.

Traders can look to buy YGE off any weakness to anticipate that breakout and simply use a stop that sits right around its 50-day at $1.65 a share. Traders can also buy off strength once YGE clears those breakout levels with volume and then use a stop that sits right below $1.88 a share.

MAG Silver

Another stock that's moving within range of triggering a near-term breakout trade is MAG Silver (MVG), which is engaged in the acquisition, exploration, and development of mineral properties, primarily silver deposits in Mexico. This stock has been trending strong to the upside so far in 2012, with shares up around 47%.

If you look at the chart for MAG Silver, you'll see that this stock has started to trend sideways during the last month, with shares moving between $9.50 on the downside and $10.52 on the upside. A high-volume move outside of that range will likely lead to the next major trend for shares of MVG.

Traders should now look for long-biased trades in MVG once it manages to break out above some near-term overhead resistance levels at its 200-day of $9.97 and then above more overhead resistance at $10.35 to $10.52 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 112,252 shares. If that breakout triggers soon, then MVG will set up to re-test or possibly take out its next major overhead resistance levels at $11.57 to $12.50 a share.

Traders can look to buy MVG off any weakness and simply use a stop that sits right around $9.50 a share. One can also buy off strength once MVG clears those breakout levels with volume and then simply use a stop that sits right below its 200-day moving average of $9.97 a share.

Vantiv

My final idea that's trending very close to triggering a major breakout trade is Vantiv (VNTV), which is an integrated payment processor. It provides a suite of comprehensive services to merchants & financial institutions of all sizes. This stock has been trending up modestly so far in 2012, with shares up 11%.

If you look at the chart for Vantiv, you'll notice that this stock has been uptrending strong for the last two months, with shares moving higher from a low of $18.85 to a recent high of $21.75 a share. During that uptrend, shares of VNTV have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of VNTV within range of triggering a major breakout trade.

Traders should now look for long-biased trades in VNTV once it manages to take out some near-term overhead resistance levels at $21.75 to $22.15 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 volume of 629,381 shares. If that breakout triggers soon, then VNTV will set up to re-test or possibly take out its next major overhead resistance levels at $23.50 to $23.74 a share.

At last check, VNTV has hit an intraday today of $21.73 and volume has already hit 3.87 million shares, which is well above its three-month average action.

One could look to buy VNTV off any weakness to anticipate that breakout and then simply use a stop that sits near its 50-day at $20.73 a share. Traders can also just buy off strength once VNTV takes out those breakout levels with volume and then simply use the same stop around 50-day or one that's a few percentage points below your entry price.

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

-- Written by Roberto Pedone in Winderemere, Fla.

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

Roberto Pedone, based out of Windermere, Fla., 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.