Stock Quotes in this Article: ARIA, CROX, RIMM, AEGR, ZIP, IQNT

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 BlackBerry maker Research In Motion (RIMM), which I featured in Nov. 01’s “5 Stocks Under $10 Set to Trade Higher in November.” I mentioned in that piece that RIMM was finding some buying interest right above its 50-day moving average and it was starting to trigger a breakout trade above some near-term overhead resistance levels at $8.08 to $8.49 a share with decent upside volume flows. I said that if RIMM held that breakout, then the stock could ultimately hit $12 to $13 a share.

Guess what happened? Shares of RIMM sold off a few days later from over $9 to $8.14 a share, but the stock never breached its 50-day moving average or its first breakout level of $8.08 a share. Shares of RIMM remained in an uptrend and the stock went on to skyrocket towards today’s high of $12.30 a share. That’s a monster gain of 55% in just the month of November for shares RIMM. Had you been focusing on those breakout prices that I highlighted in the piece, then you could’ve capitalized big off the move.

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.

Crocs

One name that’s trending very close to triggering a major breakout trade is Crocs (CROX). This company is engaged in the design, development, manufacturing, marketing and distribution of consumer products, mainly casual & athletic shoes & shoe charms, from specialty resins referred to as Croslite. This stock has been under control of the sellers for the last six months, with shares off by 23%.

If you take a look at the chart for Crocs, you’ll notice that this stock gapped down in late October from around $16.60 to a low of $12.61 a share with huge downside volume. Following that move, shares of CROX went on to make a low of $12 a share before rebounding sharply to its current price of $13.80 a share. That rebound has now pushed CROX within range of triggering a major breakout trade back above its gap down day high at $14.04 a share.

Traders should now look for long-biased trades in CROX once it manages to break out above its gap down day high of $14.04 a share with high volume. Look for a sustained move or close above $14.04 a share with volume that hits near or above its three-month average volume of 276,850 shares. If that breakout triggers soon, then CORX will set up to re-fill some of that gap down zone that started at $16.60 a share.

Traders can look to buy CROX off any weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $13 a share. One could also just buy CROX off strength once it takes out $14.04 a share with volume and then use a stop that sits near $13.50 a share.

Inteliquent

Another stock that’s just starting to flirt with a major breakout trade is Inteliquent (IQNT), which is a full-scale network solutions provider, offering intelligent networking to solve challenging interconnection and interoperability issues on a global scale. This stock has been destroyed by the sellers so far in 2012, with shares off by a whopping 79%.

If you take a look at the chart for Inteliquent, you’ll notice that this stock has been downtrending badly for the last six months, with shares plunging from $8.73 to its recent low of $2.10 a share. During that downtrend, shares of IQNT have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of IQNT have recently started to make a series of higher lows and higher highs, which is bullish price action. This stock is also starting to rise off of oversold levels, since its current relative strength index (RSI) reading is 26.50.

Market players should now look for long-biased trades in IQNT once it manages to break out above some near-term overhead resistance levels at $2.42 to $2.43 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 464,315 shares. If that breakout triggers soon, then IQNT could make a powerful bounce off oversold levels. Some possible upside targets are $3.50 to its 50-day at $4.41 a share.

One can look to buy IQNT off any weakness to anticipate that breakout and simply use a stop that sits close to some near-term support levels at $2.18 to $2.10 a share. One could also buy off strength once IQNT clears $2.42 to $2.43 a share with volume, and then use a stop close to $2.18 a share.

Aegerion Pharmaceuticals

One name that’s starting to move within range of triggering a major breakout trade is Aegerion Pharmaceuticals (AEGR), which is focused on the development and commercialization of therapeutics to treat lipid disorders. This stock has been uptrending strong so far in 2012, with shares up just over 40%.

If you look at the chart for Aegerion Pharmaceuticals, you’ll notice that this stock has been trending sideways for the last month and change, with shares moving between $18.33 on the downside and $23 a share on the upside. Shares of AEGR bounced higher on Wednesday from $19.92 to just over $22 a share with decent volume. That spike has now pushed AEGR above some near-term overhead resistance at $21.66 a share, and it’s moved it within range of triggering a major breakout trade above $23 a share.

Market players should now look for long-biased trades in AEGR once it manages to break out above some near-term overhead resistance at $23 a share with high volume. Look for a sustained move or close above $23 a share with volume that registers near or above its three-month average action of 449,761 shares. If that breakout triggers soon, then AEGR will set up to re-test or possibly take out its all-time high of $25.92 a share.

One can look to buy AEGR off any weakness to anticipate that breakout and simply use a stop that sits close to some near-term support at $19.92 a share. Traders can also buy off strength once AEGR clears $23 a share with high volume and then use a stop that sits near $22 to $21.66 a share.

Zipcar

Another stock that’s moving within range of triggering a near-term breakout trade is Zipcar (ZIP), which operates car sharing network. It provides the freedom of 'wheels when you want them' to over 560,000 Zipsters. This stock has been a favorite target of the bears in 2012, with shares down by 37%.

If you look at the chart for Zipcar, you’ll see that this stock has been uptrending strongly during the last month, with shares soaring from a low of $5.90 to its recent high of $8.64 a share. During that uptrend, shares of ZIP have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed ZIP within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in ZIP once it manages to break out above some near-term overhead resistance levels at $8.64 to $8.69 a share with high volume. Look for a sustained move or close above those level with volume that hits near or above its three-month average action of 350,502 shares. If that breakout triggers soon, then ZIP will set up to re-test or possibly take out its next major overhead resistance levels at $10.20 to $12 a share. If that breakout hits, then ZIP will also move into a previous gap down zone from August that started at around $10 a share.

Traders can look to buy ZIP off any weakness as long as it’s trending within range of its 50-day moving average of $7.26 a share. One can also buy off strength once ZIP takes out $8.64 to $8.69 a share and then simply use a stop close to $8 to $7.84 a share.

Keep in mind that this is a heavily-shorted stock, since the current short interest as a percentage of the float for ZIP is 23.9%. The bears have also been increasing their bets from the last reporting period by 5.6%, or by around 330,000 shares. If that breakout hits soon, then ZIP could easily see a monster short-squeeze as the bears rush to cover some of their short positions.

Ariad Pharmaceuticals

My final idea that’s trending very close to a near-term breakout trade is Ariad Pharmaceuticals , which is engaged in the discovery and development of breakthrough medicines to treat cancers by regulating cell signaling with small molecules. This stock has been on an absolute tear so far in 2012, with shares up a whopping 79%.

If you look at the chart for Ariad Pharmaceuticals, you’ll notice that this stock formed a double top back in October at $25.39 to $25.40 a share. After hitting selling resistance at those levels, shares of ARIA dropped sharply to its recent low of $19.30 a share. Despite that drop, shares of ARIA never violated its 200-day moving average at $18.60 a share and the stock has rebounded back to right below its 50-day moving average of $22.71 a share. That move has now pushed ARIA within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in ARIA once it manages to take out some near-term overhead resistance levels at $22.03 to $22.41 a share, and then once it takes out its 50-day at $22.71 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 2,116,890 shares. If that breakout triggers soon, then ARIA will set up to re-test or possibly take out its next major overhead resistance levels at $25 to $25.40 a share.

One could look to buy ARIA off any weakness to anticipate that breakout and then simply use a stop that sits close to some near-term support at $20.75 a share. Traders can also just buy off strength once ARIA takes out those breakout levels with volume and then simply use a stop that sits right around its 50-day at $22.71 a share.

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

-- Written by Roberto Pedone in Winderemere, Fla.

To see this week's trades in action, check out the Technical Setups for the Week portfolio on Stockpickr.

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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.