Stock Quotes in this Article: GMCR, GME, LJPC, OCLS, PRKR, ICPT

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 who can ultimately push the stock significantly higher.

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One example of a successful breakout trade I flagged recently was biopharmaceutical stock La Jolla Pharmaceutical (LJPC), which I featured in Mar. 7's "5 Stocks Ready for Breakouts" at $9.10 share. I mentioned in that piece that shares of La Jolla Pharmaceutical had recently gapped sharply higher back above its 50-day moving average with heavy upside volume. That spike was starting to push shares of LJPC within range of triggering a big breakout trade above some key near-term overhead resistance levels at $9.75 to $10.25 a share.

Guess what happened? Shares of La Jolla Pharmaceutical started to take out those breakout levels with monster upside volume the following trading session. This stock exploded to the upside on March 11 with heavy upside volume, and the stock tagged an intraday high of $19.50 a share. That represents a gain of over 100% for anyone who played this breakout in just a few trading sessions. As you can see here, trading breakouts that trigger with strong upside volume flows and lead to huge profits in a very short timeframes.

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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.

Intercept Pharmaceuticals


One biopharmaceutical player that's starting to move within range of triggering a big breakout trade is Intercept Pharmaceuticals (ICPT), which focuses on the development and commercialization of novel therapeutics to treat chronic liver diseases utilizing its proprietary bile acid chemistry. This stock has been on fire so far in 2014, with shares up huge by 575%.

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If you take a look at glance at the chart for Intercept Pharmaceuticals, you'll notice that this stock broke out today above some near-term overhead resistance at $470.87 a share. This stock has pulled back off its intraday high of $484.99 to its current level around $460 a share. This spike higher today is starting to push shares of ICPT within range of triggering a much bigger breakout trade.

Traders should now look for long-biased trades in ICPT if it manages to break out above its intraday high of $4.84.99 a share to its all-time high of $497 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 o 846,868 shares. If that breakout gets underway soon, then ICPT will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $530 to $550 a share, or even $600 a share.

Traders can look to buy ICPT off weakness to anticipate that breakout and simply use a stop that sits right around some near-term support at $432 a share. One can also buy ICTP 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.

Keurig Green Mountain


A coffee player that's starting to trend within range of triggering a big breakout trade is Keurig Green Mountain (GMCR), which is engaged in the specialty coffee and coffeemaker businesses in the U.S. and Canada. This stock is off to a strong start in 2014, with shares up sharply by 44%.

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If you take a look at the chart for Keurig Green Mountain, you'll see that this stock has recently pulled back sharply off its high of $124.42 to its recent low of $103.64 a share. During that pullback, shares of GMCR have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of GMCR have now started to bounce off its $103.64 low and the stock now looks ready to reverse its downtrend and break out and enter a new uptrend.

Traders should now look for long-biased trades in GMCR if it manages to break out above some near-term overhead resistance levels at $112.49 to $115 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 3.88 million shares. If that breakout triggers soon, then GMCR will set up to re-test or possibly take out its 52-week high at $124.42 a share.

Traders can look to buy GMCR off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $105 to $103.64 a share. One could also buy GMCR 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.

ParkerVision


A technology stock that's spiking big here and quickly moving within range of triggering a major breakout trade is ParkerVision (PRKR), which designs, develops and markets proprietary radio frequency technologies and products for use in semiconductor circuits for wireless communication products in the U.S. This stock has been red hot over the last six months, with shares up sharply by 59%.

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If you take a glance at the chart for ParkerVision, you'll see that this stock is bouncing hard to the upside today right off its 50-day moving average of $4.83 a share with strong upside volume. Volume so far has already surpassed 830,000 shares, which is well above its three-month average action of 704,553 shares. This sharp spike higher for shares of PRKR is quickly pushing the stock within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in PRKR if it manages to break out above some near-term overhead resistance levels at $5.50 to $5.80 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 704,553 shares. If that breakout kicks off soon, then PRKR will set up to re-test or possibly take out its next major overhead resistance levels at 7 to its 52-week high of $7.78 a share.

Traders can look to buy PRKR off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at its 50-day moving average of $4.83 a share or at $4.71 to $4.50 a share. One can also buy PRKR off strength once it smashes above those breakout levels share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

GameStop


Another stock that's quickly moving within range of triggering a big breakout trade is GameStop (GME), which sells new and used video game hardware, physical and digital video game software, accessories, as well as personal computer entertainment software and other merchandise. This stock has been under the control of the sellers so far in 2014, with shares off by 21%.

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If you look consult the chart for GameStop, you'll notice that this stock has been uptrending over the last month and change, with shares moving higher from its low of $32.82 to its recent high of $39 a share. During that uptrend, shares of GME have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of GME are now starting to spike back above its 50-day moving average of $38.04 a share. That spike is quickly pushing shares of GME within range of triggering a big breakout trade.

Traders should now look for long-biased trades in GME if it manages to break out above some near-term overhead resistance levels at $39 to $39.17 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 4.16 million shares. If that breakout gets underway soon, then GME will set up to re-fill some of its previous gap-down-day zone from January that started at $45.45 a share. If GME gets into that gap with volume, then this stock could easily hit $45 to $50 a share in the near future.

Traders can look to buy GME off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $36.51 a share. One can also buy GME off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Oculus Innovative Sciences


My final breakout trading prospect is health care player Oculus Innovative Sciences (OCLS), which designs, produces and markets prescription and non-prescription products based on its Microcyn platform technology for the dermatology, surgical, advanced wound and tissue care and animal health care markets in the U.S., Mexico, Europe and internationally. This stock is off to a decent start in 2014, with shares up notably by 17%.

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If you look at the chart for Oculus Innovative Sciences, you'll see that this stock has been uptrending strong for the last month and change, with shares moving higher from its low of $2.92 to its recent high of $4.35 a share. During that uptrend, shares of OCLS have been making mostly higher lows and higher highs, which is bullish technical price action. That move has started to push shares of OCLS within range of triggering a major breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in OCLS if it manages to break out above some near-term overhead resistance at $4.35 a share and then once it takes out some past overhead resistance at $4.67 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 229,785 shares. If that breakout materializes soon, then OCLS will set up to re-test or possibly take out its next major overhead resistance levels at $6 to its 52-week high at $7.21 a share.

Traders can look to buy OCLS off weakness to anticipate that breakout and simply use a stop that sits right around its 50-day moving average of $3.54 a share or near more support at $3.38 a share. One can also buy OCLS off strength once it starts to take out 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.