Stock Quotes in this Article: ANIK, AU, BONT, IKNX, SIRI

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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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.

Bon-Ton Stores


One department store player that's starting to move within range of triggering a near-term breakout trade is Bon-Ton Stores (BONT), which offers brand-name fashion apparel and accessories for women, men and children, as well as cosmetics, home furnishings, footwear and other goods. This stock has been hit hard by the sellers so far in 2014, with shares off by 29%.

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If you take a look at the chart for Bon-Ton Stores, you'll notice that this stock has been uptrending over the last two months, with shares moving higher from its low of $9.08 to its recent high of $12.04 a share. During that move, shares of BONT have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of BONT recently pulled back to its 50-day moving average and the stock is now starting to rip higher off that level and move within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in BONT if it manages to break out above some near-term overhead resistance levels at $11.90 to $12.04 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 volume of 525,148 shares. If that breakout materializes soon, then BONT will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $12.78 to just under $14 a share. Any high-volume move above those levels will then give BONT a chance to re-fill some of its previous gap-down-day zone from January that started near $16 a share.

Traders can look to buy BONT off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $10.71 a share or near more support at around $10 a share. One can also buy BONT 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.

Sirius XM


A satellite radio player that's starting to push within range of triggering a near-term breakout trade is Sirius XM (SIRI). This stock is up modestly so far in 2014, with shares higher by 7.2%.

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If you take a look at the chart for Sirius XM, you'll see this stock has pulled back sharply over the last four months, with shares sliding lower from its high of $3.89 to its recent low of $2.98 a share. During that downtrend, shares of SIRI have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of SIRI have now started to form a bottoming chart pattern, since the stock has found buying interest over the last month whenever it's pulled back to near $3 a share. Shares of SIRI are now spiking higher off those levels and it's quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in SIRI if it manages to break out above some near-term overhead resistance levels at its 50-day moving average of $3.31 to $3.40 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 70.14 million shares. If that breakout hits soon, then SIRI will set up to re-test or possibly take out it next major overhead resistance levels at its 200-day moving average of $3.62 to $3.89 a share, or even its 52-week high at $4.18 a share.

Traders can look to buy SIRI off weakness to anticipate that breakout and simply use a stop that sits right below its 52-week low at $2.98 a share. One could also buy SIRI off strength once it starts to cross above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Ikonics


Another specialty chemicals player that's starting to trend within range of triggering a major breakout trade is Ikonics (IKNX), which develops, manufactures and sells photosensitive liquids and films for the screen printing, as well as awards and recognition industries primarily in the U.S. This stock has been on fire so far in 2014, with shares up sharply by 93%.

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If you take a glance at the chart for Ikonics, you'll notice that this stock recently formed a major bottom chart pattern, after shares found buying interest each time it pulled back to around $24 a share. Shares of IKNX have now started to rip higher off those support levels and right off its 50-day moving average at $25.58 a share. That sharp spike higher is now quickly pushing shares of IKNX 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 IKNX if it manages to break out above some near-term overhead resistance levels at $29 to its 52-week high at $31.02 a share with high volume. Watch for a sustained move or close above those levels with volume that hits near or above its three-month average action of 4,221 shares. If that breakout kicks off soon, then IKNX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $35 to $40 a share.

Traders can look to buy IKNX off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $25.58 or just below those major near-term support level $24 a share. One can also buy IKNX off strength once it busts above those breakout levels share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Anika Therapeutics


Another stock that's starting to move within range of triggering a major breakout trade is Anika Therapeutics (ANIK), which develops, manufactures and commercializes therapeutic products for tissue protection, healing and repair in the U.S., Europe and internationally. This stock is in play with the bulls so far in 2014, with shares up by 18.5%.

If you look at the chart for Anika Therapeutics, you'll notice that this stock has been trending range bound and consolidating for the last two months, with shares moving between just above $46 on the upside and $35.62 on the downside. Shares of ANIK have now started to spike sharply higher right off its 50-day moving average and it's starting to break out above the upper-end of its recent sideways trading chart pattern. If this move gets some legs, then shares of ANIK could start a new uptrend that sends shares significantly higher from current levels.

Traders should now look for long-biased trades in ANIK if it manages to break out above Friday's intraday high of $45.45 to just above $46 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 466,579 shares. If that breakout triggers soon, then ANIK will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $52.49 a share. Any high-volume move above that level will then give ANIK a chance to tag $55 to $60 a share.

Traders can look to buy ANIK off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $40.81 a share. One can also buy ANIK 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.

AngloGold Ashanti


My final breakout trading prospect is gold player AngloGold Ashanti (AU), which operates as a gold mining and exploration company and also produces silver, uranium oxide and sulphuric acid as by-products. This stock has been trending strong so far in 2014, with shares up sharply by 55%.

If you look at the chart for AngloGold Ashanti, you'll see that this stock recently formed a double bottom chart pattern at $16.48 to $17 a share. Following that bottom, shares of AU have started to uptrend back above its 50-day moving average and it's quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in AU if it manages to break out above some near-term overhead resistance levels at $18.44 to $18.79 a share and then once it takes out its 52-week high at $19.53 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 3.25 million shares. If that breakout triggers soon, then AU will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $22.50 to $25 a share.

Traders can look to buy AU off weakness to anticipate that breakout and simply use a stop that sits right around some near-term support levels at $17 or at $16.60 a share. One can also buy AU 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.