DELAFIELD, Wis. (Stockpickr) -- Animal spirits are in complete control of this market.

Just pull up a daily chart for shares of Tesla Motors (TSLA) here and you'll see exactly what I am taking about. That stock is absolutely exploding higher here by 17% to a new all-time high above $250 a share. Momentum traders and trend-following traders are basking in profits in this current market, while anyone who's betting against them is getting crushed on a daily basis.

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What exactly is momentum trading? Basically, it's a strategy that aims to make profits off the continuation of existing trends in the market. A momentum trader believes that large increases in the price of a stock will be followed by additional gains -- and vice versa for stocks that are dropping sharply. This strategy is trend trading at its finest because a trader makes the conscious decision to focus only on the price of a stock they're trading. You simply find the momentum and trade it like you're a surfer riding a wave out to sea.

Part of momentum trading is ignoring everything but the price of the equity you're trading. This is why TSLA bulls have banked such huge gains -- they've ignored the bears who constantly scream about the lofty valuation. Momentum and trend traders need to have great noise filters so that they do not let anything beyond the trend, price and volume patterns of a stock drive their decisions. These market players like to trade what they "see," not what they "think." Opinions have no place in this type of trading because they will create bias and keep you out of great trades -- such as this move in TSLA.

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With that in mind, here's a look at five momentum stocks that could be setting up for sharp spikes higher in the near future.

Chipotle Mexican Grill


One quick service restaurant player that looks like momentum could continue to push its shares higher is Chipotle Mexican Grill (CMG), which develops and operates fast casual and fresh Mexican food restaurants. This stock has been on fire over the last six months, with shares up sharply by 38%.

If you consult the chart for Chipotle Mexican Grill, you'll notice that this stock recently gapped up sharply off earnings from below $490 to its recent high of $568.90 a share with monster upside volume. Following that move, shares of CMG have cooled off and consolidated between $530 and $560 a share. Shares of CMG are now starting to spike higher today and move 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 CMG if it manages to break out above some near-term overhead resistance levels $561.51 a share to its all-time high at $568.90 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 439,462 shares. If that breakout gets underway soon, then CMG will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $600 to $620 a share.

Traders can look to buy CMG off any weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $550 to $540 a share. One can also buy CMG 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.

Vertex Pharmaceuticals


One biopharmaceuticals player that's quickly setting up for a momentum traders to take it higher is Vertex Pharmaceuticals (VRTX), which is engaged in discovering, developing, manufacturing and commercializing small molecule drugs for patients with serious diseases. This stock has been a favorite among momentum investors over the last three months, with shares up sharply by 25%.

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If you take a glance at the chart for Vertex Pharmaceuticals, you'll see that this stock has been uptrending strong over the last three months, with shares soaring higher from its low of $58.06 to its recent high of $87.77 a share. During that uptrend, shares of VRTX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of VRTX within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in VRTX if it manages to break out above some near-term overhead resistance levels at $86.12 to $87.77 a share and then once it clears its 52-week high at $89.96 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 volume of 1.60 million shares. If that breakout kicks off soon, then VRTX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $95 to $100 a share.

Traders can look to buy VRTX off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $81.05 a share. One can also buy VRTX 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.

Visa


Another stock that looks ready to get a shot in the arm from momentum traders is Visa (V), which operates as a retail electronic payments network worldwide. This stock has been on fire over the last six months, with shares up sharply by 26%.

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If you take a look at the chart for Visa, you'll see that this stock has been a favorite of momentum traders over the last six months, with shares soaring higher from its low of $171.91 to its recent high of $235.08 a share. During that uptrend, shares of V have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of V recently pulled back off its 52-week high of $235.08 to just below its 50-day at $211 a share. That pullback was short lived, since shares of V have now re-entered its uptrend and marched higher to its recent high of $228.48 a share. Shares of V are now trending very close to triggering a near-term breakout trade.

Traders should now look for long-biased trades in V if it manages to break out above some near-term overhead resistance levels at $228.48 a share to its 52-week high at $235.50 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 3.27 million shares. If that breakout begins soon, then V will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $250 to $270 a share.

Traders can look to buy V off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $220.16 a share. One could also buy V 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.

Herbalife


Another stock that momentum traders love here is Herbalife (HLF), which sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products, and personal care products worldwide. This stock has been a momentum trader's best friend over the last year, with shares up a whopping 91%.

If you take a glance at the chart for Herbalife, you'll notice that this stock recently lost a lot of momentum after shares dropped sharply from its high of $83.51 to its recent low of $59.09 a share. Following that plunge, shares of HLF have now started to rebound sharply higher off $59.09 to its recent high of $71.18 a share. Shares of HLF have been consolidating over the last few weeks, with shares moving between $64 on the downside and that high of $71.18 on the upside. This stock is now starting to spike higher today and quickly move within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in HLF if it manages to break out above some near-term overhead resistance levels at $70.08 to $71.18 a share and then once it clears its 50-day moving average of $72.12 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 3.65 million shares. If that breakout materializes soon, then HLF will set up to potentially rip sharply higher back towards its next major overhead resistance levels at $75 to $80 a share. Any high-volume move above those levels will then give HLF a chance to re-test or possibly take out its 52-week high at $83.51 a share.

Traders can look to buy HLF off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $66 or are $64 a share, or even its 200-day at $62.79 a share. One can also buy HLF off strength once it starts to blast above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Vanda Pharmaceuticals


My final idea that could be ready for some strong momentum to send shares soaring higher is Vanda Pharmaceuticals (VNDA), which offers development and commercialization of products for the treatment of central nervous system disorders. This stock has been a popular name among momentum traders over the last three months, with shares up big by 41%.

If you look at the chart for Vanda Pharmaceuticals, you'll notice that this stock recently formed a major bottoming chart pattern at around $10 a share, after it pulled back from its recent high of $15.59 a share. Following that bottom, shares of VNDA have been soaring higher, with the stock consistently making higher lows and higher highs, which is bullish technical price action. That monster momentum has now pushed shares of VNDA within range of triggering a major breakout trade.

Traders should now look for long-biased trades in VNDA if it manages to break out above some near-term overhead resistance levels at $15.59 a share to its 52-week high at $15.65 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 1.16 million shares. If that breakout triggers soon, then VNDA will set up to potentially explode higher into new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $18 to $20 a share.

Traders can look to buy VNDA off any weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $14 or at $13 a share. One can also buy VNDA 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.

To see more momentum stocks with high-probability chart setups, check out the 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.