Stock Quotes in this Article: BPOP, ATOS, CNDO, ECOM, TWTR

 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 entertainment player Media General (MEG), which I featured in Nov. 8's "5 Stocks Poised for Breakouts" at $15.12 a share. I mentioned in that piece that shares of MEG were starting to spike higher right above its 50-day moving average, which had held as support for the stock over the prior five months. That spike was quickly pushing shares of MEG within range of triggering a big breakout trade above some near-term overhead resistance levels at $15.39 to $15.67 a share.

Guess what happened? Shares of MEG started to take out those key overhead resistance levels on Nov. 18 with strong upside volume flows. This stock has exploded higher since then with shares tagging an intraday high today of $19.94 a share. That represents a large gain of just over 30% for anyone who bought the stock near $15 a share in anticipation of that breakout. As you can see here, breakout trading can produce powerful returns in very short timeframes, which is why trading this strategy is so attractive.

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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.

Coronado Biosciences

One biopharmaceutical player that's quickly moving within range of triggering a major breakout trade is Coronado Biosciences (CNDO), which is focused on novel immunotherapy biologic agents for autoimmune diseases and cancer. This stock is off to a bearish start in 2013, with shares off sharply by 61%.

If you take a look at the chart for Coronado Biosciences, you'll notice that this stock gapped down sharply back in October from close to $7 to under $2 a share with heavy downside volume. Following that gap down, shares of CNDO have trended sideways in a wide range, with shares moving between $1.25 on the downside and $1.91 on the upside. Shares of CNDO have started to uptrend off that $1.25 low and it's now quickly moving within range of triggering a major breakout trade above the upper-end of its recent range.

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Traders should now look for long-biased trades in CNDO if it manages to break out above some near-term overhead resistance levels at $1.86 to $1.88 a share, and then once it takes out more resistance levels at $1.91 to its gap down day high of $2.16 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 1.42 million shares. If that breakout hits soon, then CNDO will set up to re-fill some of its massive gap down zone that started near $7 a share. Some possible upside targets if CNDO gets into that gap with volume are $2.50 to $3, or even $3.50 a share.

Traders can look to buy CNDO off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $1.50 to $1.42 a share. One can also buy CNDO off strength once it starts takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Twitter

Another social media and networking player that's quickly moving within range of triggering a big breakout trade is Twitter (TWTR), a global platform for public self-expression and conversation in real time. This stock is off to a flat start since it IPOed a few weeks ago, with shares up 0.9% since its debut.

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If you take a look at the chart for Twitter, you'll notice that this stock recently formed a triple bottom chart pattern, with buyers stepping in to support the stock post-IPO at $40, $38.80 and $40.54 a share. Since buyers stepped in at those levels, shares of TWTR have started to soar higher with the stock trading back above $45 a share. That spike has now pushed shares of TWTR within range of triggering a big breakout trade.

Traders should now look for long-biased trades in TWTR if it manages to break out above some key overhead resistance levels at $46.35 to $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 volume of 15.25 million shares. If that breakout hits soon, then TWTR will set up to re-test or possibly take out its all-time high at $50.09 a share. Any high-volume move above $50.09 will then give TWTR a chance to tag $55 to $60 a share.

Traders can look to buy TWTR off any weakness to anticipate that breakout and simply use a stop that sits right below $43 a share. One could also buy TWTR off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

ChannelAdvisor

One enterprise software player that's starting to trend within range of triggering a big breakout trade is ChannelAdvisor (ECOM), a provider of software-as-a-service solutions that enables retailers and manufacturers to integrate, manage and optimize their merchandise sales across hundreds of online channels. This stock has been on fire so far in 2013, with shares up a whopping 119%.

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If you take a look at the chart for ChannelAdvisor, you'll notice that this stock is spiking sharply higher today right above its 50-day moving average of $36.14 a share with strong upside volume flows. This move has started to push shares of ECOM into breakout territory, since the stock has taken out some near-term overhead resistance at $39.73 a share. Shares of ECOM are now quickly moving within range of triggering an even bigger breakout trade.

Traders should now look for long-biased trades in ECOM if it manages to break out above some near-term overhead resistance levels $40.91 to its all-time high of $41.25 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 268,153 shares. If that breakout triggers soon, then ECOM 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 ECOM off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $36.14 a share. One can also buy ECOM off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Atossa Genetics

Another healthcare player that's quickly moving within range of triggering a major breakout trade is Atossa Genetics (ATOS), which is involved in the prevention of breast cancer through the commercialization of diagnostic medical devices and laboratory developed tests that can detect precursors to breast cancer. This stock has been hit hard by the bears so far in 2013, with shares off sharply by 34%.

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If you look at the chart for Atossa Genetics, you'll notice that this stock has been uptrending strong over the last month and change, with shares moving higher from its low of $1.74 to its recent high of $2.73 a share. During that uptrend, shares of ATOS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ATOS within range of triggering a major breakout trade.

Traders should now look for long-biased trades in ATOS if it manages to break out above its 50-day moving average of $2.55 a share to more near-term overhead resistance at $2.73 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 455,805 shares. If that breakout triggers soon, then ATOS will set up to re-test or possibly take out its gap down day high from October at $3.18 a share. Any high-volume move above $3.18 will then give ATOS a chance to re-fill some of its previous gap down zone that started near $5.50 a share.

Traders can look to buy ATOS off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $2.24 a share, or around $2 a share. One can also buy ATOS off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Popular

My final breakout trading prospect is Popular (BPOP), a publicly owned bank holding company that offers retail and commercial banking services through its main banking subsidiary, Banco Popular de Puerto Rico. This stock is off to a strong start so far in 2013, with shares up sharply by 37%.

 

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If you look at the chart for Popular, you'll notice that this stock has been uptrending strong for the last two months, with shares moving higher from its low of $23.97 to its recent high of $29.05 a share. During that uptrend, shares of BPOP have been consistently making higher lows and higher highs, which is bullish technical price action. This stock recently pulled back to its 50-day moving average and subsequently bounced higher. Shares of BPOP are now quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in BPOP if it manages to break out above some near-term overhead resistance levels at $29.05 a share to its 200-day moving average at $29.08 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 1.27 million shares. If that breakout triggers soon, then BPOP will set up to re-test or possibly take out its next major overhead resistance levels at $32 to its 52-week high at $34.34 a share. Any high-volume move above $34.34 will then give BPOP a chance to tag $40 a share.

Traders can look to buy BPOP off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $26.58 a share. One could also buy BPOP off strength once it starts to clear 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.