Stock Quotes in this Article: ARUN, AUXL, CBOE, CME, NBIX

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 that I flagged recently was Chinese mobile application player Sky-mobi (MBOI), which I featured in Sept. 27's "5 Stocks Poised for Breakouts" at around $3.74 a share. I mentioned in that piece that shares of MOBI recently formed a triple-bottom chart pattern at $3.31, $3.28 and $3.40 a share. After forming that bottom, shares of MOBI started to uptrend and challenge its 50-day moving average of $3.76 a share. That move was pushing MOBI within range of triggering a breakout trade above some near-term overhead resistance levels at $3.71 to $3.83 a share.

Guess what happened? Shares of MOBI triggered that breakout on Wednesday with monster upside volume. This stock soared to its intraday high on Wednesday of $4.59 a share, which represents a gain of just over 20% for anyone who played the breakout. Shares of MOBI still look poised for higher prices, and traders should now look to play the next breakout trade which will trigger if resistance at $4.59 to $4.96 a share gets taken out with volume.

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

CME Group

One financial market player that's starting to move within range of triggering a major breakout trade is CME Group (CME), which offers products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. This stock has been in play with the bulls so far in 2013, with shares up sharply by 48%.

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If you take a look at the chart for CME Group, you'll notice that this stock recently formed a triple bottom chart pattern at $70.42, to $69.88 and $70.28 a share. Following that bottom, shares of CME have now started to trend back above its 50-day moving average of $72.70 a share. That move is quickly pushing CME within range of triggering a major breakout trade.

Traders should now look for long-biased trades in CME if it manages to break out above some near-term overhead resistance levels at $75.50 to $77.65 a share and then once it clears its 52-week high at $79.45 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 1.84 million shares. If that breakout hits soon, then CME will set up to enter new 52-week-high territory above $79.45, which is bullish technical price action. Some possible upside targets off that breakout are $90 to $100 a share.

Traders can look to buy CME off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $72.70 a share or just below more support at $70 a share. One can also buy CME 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.

CBOE Holdings

Another stock that looks ready to trigger a near-term trade is CBOE Holdings (CBOE), which is engaged in the trading of options on individual equities, market indexes and exchange-traded funds. This stock has been on fire so far in 2013, with shares up sharply by 56%.

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If you take a look at the chart for CBOE Holdings, you'll notice that this stock recently formed a triple bottom chart pattern at $44.44, $44.58 and $44.86 a share. Following that bottom, shares of CBOE have started to uptrend modestly and move within range of taking out some key near-term overhead resistance levels.

Traders should now look for long-biased trades in CBOE if it manages to break out above some near-term overhead resistance at $46.98 a share and then once it takes out its 50-day moving average of $46.98 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 612,798 shares. If that breakout hits soon, then CBOE will set up to re-test or possibly take out its next major overhead resistance levels at $49.59 a share to its 52-week high at $51.12 a share. Any high-volume move above $51.12 will then give CBOE a chance to tag $60 to $65 a share.

Traders can look to buy CBOE off any weakness to anticipate that breakout and simply use a stop that sits right below $44 a share. One could also buy CBOE 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.

Aruba Networks

One network equipment player that's quickly moving within range of triggering a major breakout trade is Aruba Networks (ARUN), which provides enterprise mobility solutions. This stock is off to a weak start in 2013, with shares off by 11%.

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If you take a look at the chart for Aruba Networks, you'll notice that this stock just formed a major bottom chart pattern, after buyers stepped in to support the price over the last month and change from $17 to $16.25 a share. Following that bottom, shares of ARUN have now started to rebound higher and move back above its 50-day moving average of $17.73 a share. That move is quickly pushing shares of ARUN within range of triggering a major breakout trade.

Traders should now look for long-biased trades in ARUN if it manages to break out above some near-term overhead resistance levels at $19.16 a share to its 200-day moving average at $19.63 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 2.12 million shares. If that breakout triggers soon, then ARUN will set up to re-fill some of its previous gap down zone from May that started near $22 a share. Any high-volume move above $22 will then give ARUN a chance to hit $24 to $25 a share.

Traders can look to buy ARUN off any weakness to anticipate that breakout and simply use a stop that sits right below support at $17 a share or below $16.25 a share if you want to give it more room. One can also buy ARUN 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.

Neurocrine Biosciences

Another stock that's starting to trend within range of triggering a major breakout trade is Neurocrine Biosciences (NBIX), which discovers, develops and commercializes drugs for the treatment of neurological and endocrine-related diseases and disorders. This stock has been a hot name with bulls so far in 2013, with shares up 57%.

If you look at the chart for Neurocrine Biosciences, you'll notice that this stock recently gapped down sharply from $16.74 to below $11.50 a share with heavy downside volume flows. Following that gap down, shares of NBIX went on to continue its trend lower and the stock hit a new low of $10.42 a share. Shares of NBIX have started to rebound off that $10.42 low and it's now moving within range of triggering a major breakout trade.

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Traders should now look for long-biased trades in NBIX if it manages to break out above some near-term overhead resistance levels at its 200-day moving average of $11.92 a share and above its gap down day high of $12.17 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 894,145 shares. If that breakout triggers soon, then NBIX will set up to re-fill some of its previous gap down zone from September that started at $16.74 a share. Some possible upside targets for NBIX if it gets into that gap with volume are $14 to $15 a share.

Traders can look to buy NBIX off any weakness to anticipate that breakout and simply use a stop that sits right below support at $11 a share, or below that recent low of $10.42 a share. One can also buy NBIX off strength once it takes out that breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Auxilium Pharmaceuticals

My final breakout trading prospect is specialty biopharmaceutical player Auxilium Pharmaceuticals (AUXL), which develops and markets products to urologists, endocrinologists, orthopedists and select primary care physicians and plastic surgeons who focus on the hand, and rheumatologists. This stock is off to a slow start in 2013, with shares up just 8.3% during the last six months.

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If you look at the chart for Auxilium Pharmaceuticals, you'll notice that this stock recently formed a triple bottom chart pattern at $17.36, $17.74 and $17.57 a share. Following that bottom, shares of AUXL have now started to trend back above its 50-day moving average of $18.29 a share. That move is quickly pushing shares of AUXL within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in AUXL if it manages to break out above some near-term overhead resistance levels at $19 to $19.08 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 834,717 shares. If that breakout triggers soon, then AUXL will set up to re-test or possibly take out its next major overhead resistance level at $20.95 a share. Any high-volume move above that level will then give AUXL a chance to re-test its 52-week high at $25.54 a share.

Traders can look to buy AUXL off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $17.36 to $16.77 a share. One could also buy AUXL 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.

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.