Stock Quotes in this Article: HLF, INFI, JMBA, VEEV, SSNI

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 biotechnology player Organovo (ONVO), which I featured in Aug. 16's "5 Stocks Poised for Breakouts" at $6 a share. I mentioned in that piece that shares of ONVO had started to reverse its downtrend and the stock was beginning to enter a new uptrend. That move was quickly pushing shares of ONVO within range of triggering a near-term breakout trade above some key overhead resistance levels at $6.20 to $6.65 a share.

Guess what happened? Shares of ONVO went on to trigger that breakout in late October with monster upside volume. Prior to breaking out, shares of ONVO were able to hold some key near-term support at around $5 a share, which ended up being the floor for the stock over the last two months and change. Shares of ONVO have now tagged an intraday high today of $13.43 a share, which represents a monster gain of over 100% since the time of my original article. This stock has now entered extremely overbought territory, since its current relative strength index reading is 88.

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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.

Veeva Systems

One stock that's starting to enter breakout territory here is Veeva Systems (VEEV), which is a provider of industry-specific cloud-based software solutions for the life sciences industry. This stock is off to a decent start since its IPO in October, with shares up 9%.

If you take a look at the chart for Veeva Systems, you'll notice that this stock found some buying interest over the last few weeks, when shares traded down near $35 and $36 a share. Shares of VEEV have now started to spike sharply higher off its recent low of $36.60 a share, and that move is quickly pushing shares of VEEV into breakout territory above some near-term overhead resistance at $40.62 a share.

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Traders should now look for long-biased trades in VEEV if it manages to break out above some near-term overhead resistance levels at $40.62 a share to Friday's intraday high of $41.05 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 1.27 million shares. If that breakout hits soon, then VEEV will set up to re-test or possibly take out its next major overhead resistance levels at $44.62 to its all-time high at $49 a share. Any high-volume move above those levels will then give VEEV a chance to trend well north of $50 a share.

Traders can look to buy VEEV off any weakness to anticipate that breakout and simply use a stop that sits right below Friday's low of $38.64 a share, or near $36.60 a share. One can also buy VEEV 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.

Herbalife

Another stock that looks poised to trigger a near-term breakout trade is Herbalife (HLF), a global nutrition company that sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products as well as personal care products. This stock is off to a hot start in 2013, with shares up sharply by 108%.

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If you take a look at the chart for Herbalife, you'll notice that this stock is spiking sharply higher here right off its 50-day moving average of $66.52 a share. That spike is quickly pushing shares of HLF 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 at $70.33 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 2.67 million shares. If that breakout hits soon, then HLF will set up to re-test or possibly take out its 52-week high at $74.94 a share. Any high-volume move above its 52-week high will then give HLF a chance to tag $85 to $90 a share.

Traders can look to buy HLF off any weakness to anticipate that breakout and simply use a stop that sits right below Friday's low of $65.86 a share, or below $65 to $65 a share. One could also buy HLF off strength once it takes out $70.33 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Infinity Pharmaceuticals

One biotechnology player that's starting to move within range of triggering a near-term breakout trade is Infinity Pharmaceuticals (INFI), which discovers, develops and delivers medicines for the treatment of cancer and related conditions. This stock has been hammered by the bears so far in 2013, with shares down sharply by 59%.

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If you take a look at the chart for Infinity Pharmaceuticals, you'll notice that this stock has been downtrending badly over the last two months and change, with shares plunging lower from its high of $21.60 to its recent low of $11.57 a share. During that downtrend, shares of INFI have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of INFI have now started to rebound sharply off that $11.57 low and it's quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in INFI if it manages to break out above some near-term overhead resistance levels at $14.60 to $15.40 a share, and then once it takes out its 50-day moving average of $16.04 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 767,245 shares. If that breakout triggers soon, then INFI will set up to re-test or possibly take out its next major overhead resistance levels at $17.63 to $19 a share. Any high-volume move above those levels will then give INFI a chance to tag $20 to $21 a share.

Traders can look to buy INFI off any weakness to anticipate that breakout and simply use a stop that sits right below $13 to $12.50 a share. One can also buy INFI 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.

Silver Spring Networks

A technology stock that's quickly moving within range of triggering a big breakout trade is Silver Spring Networks (SSNI), which provides a networking platform and solutions that enable utilities to transform the power grid infrastructure into the smart grid. This stock has been on a hot streak over the last six months, with shares up by 22%.

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If you look at the chart for Silver Spring Networks, you'll notice that this stock has been uptrending strong for the last month and change, with shares moving higher from its low of $14.63 to its recent high of $22 a share. During that uptrend, shares of SSNI have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SSNI within range of triggering a big breakout trade.

Traders should now look for long-biased trades in SSNI if it manages to break out above some near-term overhead resistance levels at $22 to $22.73 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 491,731 shares. If that breakout triggers soon, then SSNI will set up to re-test or possibly take out its next major overhead resistance levels at $23.90 to its gap down day high from August at $25.25 a share. Any high-volume move above $25.25 a share will then give SSNI a chance to re-fill some of that previous gap down zone that started near $32 a share.

Traders can look to buy SSNI off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $19.01 a share, or near $18 a share. One can also buy SSNI 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.

Jamba

My final breakout trading prospect is Jamba (JMBA), which operates as a retailer of blended-to-order fruit smoothies, squeezed-to-order juices, blended beverages and snacks. This stock has been hit hard by the bears during the last six months, with shares off by 22%.

If you look at the chart for Jamba, you'll notice that this stock has been trending sideways and consolidating over the last month and change, with shares moving between $10.37 on the downside and $11.72 on the upside. This sideways trading pattern is coming after shares of JMBA gapped down sharply in October from over $13.50 to that low of $10.37 a shares. Shares of JMBA are now starting to spike higher and move 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 JMBA if it manages to break out above some near-term overhead resistance levels at $11.44 to $11.72 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 240,782 shares. If that breakout triggers soon, then JMBA will set up to re-fill some of its previous gap down zone from October that started above $13.50 a share.

Traders can look to buy JMBA off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $10.43 to $10.37 a share. One could also buy JMBA 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.

RELATED LINKS:

>>4 Stocks Under $10 to Trade for Breakouts
>>5 Stocks Set to Soar on Bullish Earnings

>>2 Oversold Stocks That Could Bounce Higher

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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.