Stock Quotes in this Article: CLNT, MEG, KIOR, VJET, PETX

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 I flagged recently was photovoltaic energy player Sunedison (SUNE), which I featured in Sept. 20's "5 Stocks Ready to Break Out" at around $7.90 a share. I mentioned in that piece that shares of SUNE had formed a double bottom chart pattern at $7.08 to $7.13 a share. Following that bottom, shares of SUNE were starting to spike higher and move within range of triggering a breakout trade above some key near-term overhead resistance levels at $8.35 to $8.41 a share.

Guess what happened? Shares of SUNE started to flirt with those breakout levels in early October as the stock tagged $8.52 and then $9.10 a share. All of the pullbacks off those levels were bought, and SUNE has continued to soar higher with the stock tagging an intraday high today of $11.98 a share. That represents a monster gain of 50% from that $7.90 price level the stock was trading at in my original article. Breakouts like this are a beautiful thing to see, since shares of SUNE maintained a perfect uptrending chart pattern once it started to take those key resistance levels out.

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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.

Media General

One newspaper player that's quickly moving within range of triggering a big breakout trade is Media General (MEG), which is a provider of news, information and entertainment across 18 network-affiliated television stations, digital media and mobile platforms, serving consumers and advertisers in strong local markets, primarily in the Southeastern U.S. This stock has been on fire so far in 2013, with shares up a whopping 253%.

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If you take a look at the chart for Media General, you'll notice that this stock is spiking higher right above its 50-day moving average of $13.57 a share. That 50-day for MEG has held as support for the last five months. This spike is quickly pushing shares of MEG within range of entering breakout and new 52-week-high territory.

Traders should now look for long-biased trades in MEG if it manages to break out above some near-term overhead resistance levels at $15.39 to its 52-week high at $15.67 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 188,023 shares. If that breakout hits soon, then MEG will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $20 to $23 a share.

Traders can look to buy MEG off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $13.57 a share. One can also buy MEG 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.

Cleantech Solutions

Another basic materials player that looks ready to trigger a major breakout trade is Cleantech Solutions (CLNT), which manufactures and sells high-precision forged rolled rings, yaw bearings and shafts. It also manufactures and sells textile dyeing and finishing machines. This stock is off to a strong start in 2013, with shares up 58%.

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If you take a look at the chart for Cleantech Solutions, you'll notice that this stock has been uptrending for the last two months and change, with shares moving higher from its low of $4.82 to its recent high of $7.04 a share. During that uptrend, shares of CLNT have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CLNT within range of triggering a major breakout trade.

Traders should now look for long-biased trades in CLNT if it manages to break out above some near-term overhead resistance levels at $6.68 to $7.04 a share, and then once it takes out more resistance at $7.79 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 758,917 shares. If that breakout hits soon, then CLNT will set up to re-test or possibly take out its next major overhead resistance levels at $9 to $10 a share.

Traders can look to buy CLNT off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $5.67 a share, or around more support at $5 a share. One could also buy CLNT 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.

Voxeljet AG

One technology player that's quickly moving within range of triggering a near-term breakout trade is Voxeljet AG (VJET), which provides three-dimensional printers and on-demand parts services. This stock is off to a strong start in 2013, with shares up 25%. 


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If you take a look at the chart for Voxeljet AG, you'll notice that this stock has been uptrending strong since it IPOed in October, with shares ripping higher from under $20 to its recent high of $42.76 a share. During that uptrend, shares of VJET have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of VJET within range of entering breakout and new all-time high territory.

Traders should now look for long-biased trades in VJET if it manages to break out above its all-time high of $42.76 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 action of 2.55 million shares. If that breakout triggers soon, then VJET will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $55 a share.

Traders can look to buy VJET off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $37.50 or $35 a share. One can also buy VJET off strength once it takes out $42.76 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

KiOR

Another biodiesel player that's starting to move within range of triggering a big breakout trade is KiOR (KIOR), which is a next-generation renewable fuels company, producing cellulosic gasoline and diesel from abundant non-food biomass. This stock has been trashed by the bears so far in 2013, with shares off by 62%.

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If you look at the chart for KiOR, you'll notice that this stock has been trending sideways and consolidating for the last month, with shares moving between $2.06 on the downside and $3.10 on the upside. Shares of KIOR are now starting to spike higher right above its 50-day moving average of $2.20 a share, and it's quickly moving within range of triggering a big breakout trade above the upper-end of its recent sideways trading chart pattern.

Traders should now look for long-biased trades in KIOR if it manages to break out above some near-term overhead resistance levels at $2.54 to $2.62 a share, and then once it takes out more near-term overhead resistance levels at $2.87 to $3.10 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 882,812 shares. If that breakout triggers soon, then KIOR will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $4.05 to $5 a share.

Traders can look to buy KIOR off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $2.20 a share, or around its recent low of $2.06 a share. One can also buy KIOR 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.

Aratana Therapeutics

My final breakout trading prospect is development-stage biopharmaceutical player Aratana Therapeutics (PETX), which is engaged in licensing, development and commercialization of prescription medicines for pets. This stock is off to a monster start so far in 2013, with shares up a whopping 143%.

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If you look at the chart for Aratana Therapeutics, you'll notice that this stock has been downtrending badly for the last month, with shares dropping from its all-time high of $29.32 to its recent low of $18.20 a share. During that downtrend, shares of PETX have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of PETX have recently formed a double bottom chart pattern at $18.33 to $18.20 a share. This stock has now started to bounce off that bottom, and it's quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in PETX if it manages to break out above some near-term overhead resistance levels at $21.71 to $22 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 91,260 shares. If that breakout triggers soon, then PETX will set up to re-test or possibly take out its next major overhead resistance levels at $25.50 to $28 a share. Any high-volume move above those levels will then give PETX a chance to re-test or take out its all-time high at $29.32 a share.

Traders can look to buy PETX off any weakness to anticipate that breakout and simply use a stop that sits right below that double bottom zone at $18.33 to $18.20 a share. One could also buy PETX 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.