Stock Quotes in this Article: GENE, IMH, VDSI, VTUS, CZR

WINDERMERE, Fla. (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.

An example of a recent successful breakout trade is technology player Uni-Pixel (UNXL) which I featured in Feb. 15’s “5 Stocks Poised for Breakouts” at around $18.20 a share. I mentioned in that piece that shares of UNXL were uptrending strong for the last month, with the stock consistently making higher lows and higher highs, which is bullish technical price action. That move was quickly pushing shares of UNXL within range of triggering a major breakout trade once it managed to clear some near-term overhead resistance levels at $18.87 to $19.67 with high volume.

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Guess what happened? Shares of UNXL started to trigger that breakout shortly after my article hit, and the stock ended up closing at $19.65 a share, after hitting an intraday high of $19.76 a share with decent volume. On the next trading session, shares of UNXL exploded to the upside with heavy volume, and the stock tagged its recent high of $22.38 a share. Had you bought UNXL off any weakness on Friday and anticipated that breakout, then you bank some serious gains of over 20% in just two trading sessions. Shares of UNXL have now pulled back to some near-term support at $18.40 a share, and as long as it holds that level, then this stock could be setting up for another run at its 52-week high of $22.38 a share.

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.

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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.

With that in mind, here’s a look at five stocks that are setting up to break out and trade higher from current levels.

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Ventrus Biosciences


One name that’s trending very close to triggering a major breakout trade is Ventrus Biosciences (VTUS), which is a specialty pharmaceutical company focused on the development and commercialization of late-stage prescription drugs for gastrointestinal disorders, specifically hemorrhoids, anal fissures and fecal incontinence. This stock is off to a hot start in 2013, with shares up a whopping 29%.

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If you take a look at the chart for Ventrus Biosciences, you’ll see that this stock has been uptrending strong for the last month, with shares moving higher from its low of $2.42 to its recent high of $2.98 a share. During that uptrend, shares of VTUS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has also been accompanied by strong upside volume, and VTUS is now quickly moving within range of triggering a major breakout trade.

Traders should now look for long-biased trades in VTUS if it manages to break out above some near-term overhead resistance at $2.98 a share with high volume. Look for a sustained move or close above $2.98 a share with volume that registers near or above its three-month average action of 177,984 shares. If that breakout triggers soon, then VTUS will set up to re-test or possibly take out its recent super spike high of $3.92 a share.

Traders can look to buy VTUS off any weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support levels at $2.67 to $2.56 a share or even near its 50-day moving average at $2.43 a share. One could also buy off strength once VTUS takes out $2.98 a share with volume and then simply use a stop that sits just below $2.67 to $2.56 a share.

Keep in mind that VTUS sports a low tradable float of just 8.39 million shares, so any big volume breakout could easily send this stock skyrocketing higher.

Impac Mortgage

Another stock that’s trending within range of triggering a near-term breakout trade is Impac Mortgage (IMH), which operations include the mortgage and real estate fee-based business activities conducted by its subsidiaries, Integrated Real Estate Service, IMH Assets and Impac Funding. This stock has been on fire during the last six months, with shares up 240%.

If you take a look at the chart for Impac Mortgage, you’ll notice that this stock has just started to trend back above its 50-day moving average of $13.40 a share with decent upside volume flows. This move is quickly pushing shares of IMH within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in IMH if it manages to break out above some near-term overhead resistance levels at $14.69 to $15.50 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 83,174 shares. If that breakout triggers soon, then IMH will set up to re-test or possibly take out its next major overhead resistance levels near $17 to $18 a share. Any high-volume move above $18 would then push shares of IMH into new 52-week high territory, which is bullish technical price action. Some possible targets off that move are $20 to $22 a share.

Traders can look to buy IMH off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $13.40 a share. One could also buy off strength once IMH clears those breakout levels with volume and then simply use a stop that sits just below $14 a share.

This stock is popular among the short-sellers, since its current short interest as a percentage of its float is 10.4%. When you combine that short interest with its low float of just 6.49 million shares, then you have a recipe for a big move if that breakout triggers soon.

Genetic Technologies

Another stock that’s quickly moving within range of triggering a near-term breakout trade is Genetic Technologies (GENE), which provides genetic testing services. This stock is off to a strong start in 2013, with shares up sharply by 24%.

If you look at the chart for Genetic Technologies, you’ll notice that this stock has been uptrending strong for the last two months, with shares moving higher from its low of $2.10 to its recent high of $2.90 a share. During that uptrend, shares of GENE have been consistently making higher lows and higher highs, which is bullish technical price action. That move has quickly pushed shares of GENE within range of triggering a near-term breakout trade.

Market players should now look for long-biased trades in GENE if it manages to break out above some near-term overhead resistance levels at $2.75 to $2.80 a share and then once it takes out more resistance at $2.90 to its 200-day at $3.14 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 38,979 shares. If that breakout triggers soon, then GENE will set up to re-test or possibly take its next major overhead resistance levels at $3.40 to $3.80 a share. Any high-volume move above those levels will then put $3.95 to $4.22 into range for shares of GENE.

Traders can look to buy GENE off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $2.47 a share or around more support at $2.36 a share. One can also buy GENE off strength once it clears those breakout levels with volume and then simply use a stop that sits right below its 50-day at $2.47 a share. I would add to either position once GENE clears its 200-day at $3.14 a share with heavy upside volume.

Vasco Data Security

Another stock that’s moving within range of triggering a near-term breakout trade is Vasco Data Security (VDSI), which designs, develops, markets and supports open standards-based hardware and software security systems that manage and secure access to information assets. This stock has been in play with the bulls for the last three months, with shares up by 13.4%.

If you look at the chart for Vasco Data Security, you’ll notice that this stock has been trending sideways for the last two months and change, with shares moving between $7.36 on the downside and $8.49 on the upside. Shares of VDSI have now started to trend back above both its 50-day at $7.97 a share and its 200-day at $8.11 a share, and its quickly moving within range of triggering a breakout trade above the upper-end of its recent sideways chart pattern.

Traders should now look for long-biased trades in VDSI if it manages to break out above some near-term overhead resistance levels at $8.43 to $8.49 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 volume of 130,574 shares. If that breakout triggers soon, then VDSI will set up to re-fill some of its previous gap down zone from last October that started above $9 a share. If that gap gets filled, then VDSI could easily trend up towards $10.40 to $10.96 a share, or possibly even higher.

Traders can look to buy VDSI off any weakness to anticipate that breakout and simply use a stop that sits right below today’s low of $7.92 a share or around more support at $7.36 a share. One can also buy off strength once VDSI takes out those breakout levels with volume and then simply use a stop that sits right below its 200-day moving average of $8.11 a share.

Caesars Entertainment

My final idea today for a breakout trade is Caesars Entertainment (CZR), a casino-entertainment provider and the most geographically diverse U.S. casino-entertainment company. This stock has been exploding higher so far in 2013, with shares up 67%.

If you look at the chart for Caesars Entertainment, you’ll notice that this stock recently sold off hard from its recent high of $14.25 a share to right around $10.50 a share. Following that pullback, shares of CZR have started to form consolidation pattern at around $10.60 to $12 a share, and it’s now quickly moving within range of breaking about above the recent highs of its consolidation chart pattern.

Traders should now look for long-biased trades in CZR if it manages to break out above some near-term overhead resistance at $12.10 a share with high volume. Look for a sustained move or close above $12.10 share with volume that hits near or above its three-month average action of 838,684 shares. If that breakout triggers soon, then CZR will set up to re-test or possibly take out its next major overhead resistance levels at $13.14 to $14.25 a share. Any high-volume move above $14.25 will then put $15.74 to $17.30 into range for shares of CZR.

Traders can look to buy CZR off any weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $10.62 a share. One could also buy CZR off strength once it takes out $12.10 a share with volume and then simply use a stop that sits just below today’s low of $11.04 a share.

This stock is a favorite target of the short-sellers, since its current short interest as a percentage of its float is extremely high at 19%. If that breakout triggers soon, then CZR could easily setup for a monster short-squeeze, so make sure to put this name on your breakout trading radar.

To see more breakout candidates, check out the Breakout Stocks of the Week portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., 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.