Stock Quotes in this Article: ACTG, PKD, RAX, SGYP, PBYI

MADISON, 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.

One example of a successful breakout trade I flagged recently was global thermal processing systems provider Amtech Systems (ASYS), which I featured in April 26's "5 Stocks Poised for Big Breakouts" at around $3.80 a share. ASYS had just started to trend back above its 50-day and 200-day moving averages with above-average volume, which was quickly pushing shares within range of triggering a major breakout trade above some near-term overhead resistance levels at $3.93 to $4.08 a share.

>>5 Stocks Under $10 Set to Soar

Guess what happened? Shares of ASYS didn't wait long to trigger that breakout after the stock flirted with those overhead resistance levels for most of May. Then on May 20 this stock exploded higher and hit $4.50 a share with heavy upside volume. Shares of ASYS continued to uptrend and hit a new 52-week high on Thursday of $6.85 a share. That represents a gain of close to 80% in just a few months for anyone who bought the breakout for ASYS.

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.

>>5 Big Trades After the Fed Meeting

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 and hold above past resistance levels, then it can easily trend significantly higher.

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

>>5 Stocks the Pros Love This Summer

Parker Drilling

One stock that's starting to move within range of triggering a major breakout trade is Parker Drilling (PKD), which provides contract drilling and drilling-related services and operates in approximately 12 countries. This stock has risen modestly so far in 2013, with shares up 9.7%.

If you take a look at the chart for Parker Drilling, you'll notice that this stock has been uptrending strong for the last few weeks, with shares moving higher from its low of $4.15 to its recent high of $5.20 a share. During that uptrend, shares of PKD have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of PKD within range of triggering a major breakout trade.

>>Why the Fed's "Taper Tantrum" Doesn't Matter

Traders should now look for long-biased trades in PKD if it manages to break out above some key overhead resistance levels at $5.20 to $5.23 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 744,448 shares. If that breakout triggers soon, then PKD will set up to re-test or possibly take out its next major overhead resistance level $6.18 to $6.50 a share. Any high-volume move above those levels will then put its next major overhead resistance levels at $7.19 to $7.60 within range for shares of PKD.

Traders can look to buy PKD off any weakness to anticipate that breakout and simply use a stop that sits right below either its 200-day at $4.58 or its 50-day at $4.42 a share. One could also buy PKD off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Synergy Pharmaceuticals

Another stock that looks ready to trigger a near-term breakout trade is Synergy Pharmaceuticals (SGYP), which is focused on the development of drugs to treat gastrointestinal disorders and diseases. This stock is off to a slow start so far in 2013, with shares off by 10%.

>>5 Health Care Stocks Under $10 to Watch

If you take a look at the chart for Synergy Pharmaceuticals, you'll notice that this stock has been trending sideways inside of a consolidation chart pattern for the last two months and change, with shares moving between $4.30 on the downside and $5.47 a share on the upside. Shares of SGYP are starting to trend higher here and move within range of both its 50-day and 200-day moving averages. That move is pushing SGYP close to triggering a near-term breakout trade above the upper-end of its sideways chart pattern.

Market players should now look for long-biased trades in SGYP if it manages to break out above its 50-day at $4.96 and its 200-day at $5.17 a share and then once it takes out more near-term resistance levels at $5.30 to $5.47 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 1.11 million shares. If that breakout triggers soon, then SGYP will set up to re-test or possibly take out its next major overhead resistance levels at $6.50 to its 52-week high at $7.44 a share.

Traders can look to buy SGYP off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $4.55 or $4.30 a share. One could also buy SGYP off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Acacia Research

Another stock that's starting to move within range of triggering a near-term breakout trade is Acacia Research (ACTG), which through its operating subsidiaries acquires, develops, licenses and enforces patented technologies. This stock is off to a slow start in 2013, with shares down by 6.4%.

>>5 Stocks Poised to Pop on Bullish Earnings

If you look at the chart for Acacia Research, you'll notice that this stock has been trending sideways for the last two months, with shares moving between $22.84 on the downside and $25.48 on the upside. Shares of ACTG are now starting to push higher and move within range of both its 50-day and 200-day moving averages. That move is quickly setting up ACTG to potentially trigger a near-term breakout trade above the upper end of its recent sideways chart pattern.

Market players should now look for long-biased trades in ACTG if it manages to break out above both its 50-day at $24.57 and its 200-day at $25.69 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 702,953 shares. If that breakout hits soon, then ACTG will set up to re-test or possibly take out its next major overhead resistance level at $27 a share. Any high-volume move above $27 will then give ACTG a chance to re-fill its previous gap down zone from April that started near $30 a share.

Traders can look to buy ACTG off any weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $23.33 or $22.84 a share. One can also buy ACTG off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Puma Biotechnology

Another stock that' quickly moving within range of triggering a major breakout trade is Puma Biotechnology (PBYI), which acquires and develops innovative products for the treatment of various forms of cancer. This stock has been on fire so far in 2013, with shares up a whopping 113%.

>>3 Health Care Stocks Spiking on Big Volume

If you look at the chart for Puma Biotechnology, you'll notice that this stock has been uptrending very strong for the last six months, with shares soaring higher from its low of $18.52 to its recent high of $40.49 a share. During that uptrend, shares of PBYI have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of PBYI within range of triggering a major breakout trade.

Traders should now look for long-biased trades in PBYI if it manages to break out above its all-time high at $40.49 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 158,936 shares. If that breakout triggers soon, then PBYI will set up to enter new all-time high territory, which is bullish technical price action. Some possible upside targets off that breakout are $60 to $70 a share.

Traders can look to buy PBYI off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $38 to $36 a share. One can also buy PBYI off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Rackspace Hosting

My final breakout trading idea today is Rackspace Hosting (RAX), which is a provider of cloud computing services, managing Web-based IT systems for small and medium-sized businesses as well as large enterprises. This stock has been destroyed by the sellers so far in 2013, with shares off by a whopping 51.8%.

>>5 Stocks Insiders Love Right Now

If you look at the chart for Rackspace Hosting, you'll notice that this stock has been downtrending badly for the last six months, with shares plunging lower from its high of near $80 to its recent low of $33.91 a share. During that downtrend, shares of RAX have mostly been making lower highs and lower lows, which is bearish technical price action. That said, shares of RAX recently formed a double bottom at $33.91 to $34 a share. Shares of RAX have now started to rebound off that double bottom area and the stock is quickly moving within range of triggering a near-term breakout trade above a key descending trendline.

Traders should now look for long-biased trades in RAX if it manages to break out above some near-term overhead resistance levels at $38.12 to $39.90 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 2.31 million shares. If that breakout triggers soon, then RAX will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $41.37 to $43.16 a share. Any high-volume move above those levels will then give RAX a chance to re-fill its previous gap down zone from May that started at $52.45 a share.

Traders can look to buy RAX off any weakness to anticipate that breakout and simply use a stop that sits right below its double bottom area at $34 to $33.91 a share. One could also buy RAX off strength once it clears those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point. I would add to either position once RX takes out $43.16 a share with heavy upside volume.

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

-- Written by Roberto Pedone in Madison, Wis.

RELATED LINKS:

>>3 Stocks Under $10 Making Big Moves
>>5 Buy Signals From the Consumer Sector

>>3 Stocks With Ever-Increasing Dividends

Follow Stockpickr on Twitter and become a fan on Facebook.

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

Roberto Pedone, based out of Madison, 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.