Stock Quotes in this Article: AMED, ARTX, EBIX, FXEN, PTIE

 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 renewable energy player Hanwha Solarone (HSOL), which I featured in Sept. 26's "5 Stocks Ready to Breakouts" at around $4.10 a share. I mentioned in that piece that shares of HSOL were uptrending strong over last few months, with shares making mostly higher lows and higher highs, which is bullish technical price action. That move was starting to push HSOL within range of triggering a big breakout trade above its 52-week high at $4.28 a share.

Guess what happened? Shares of HSOL didn't wait long to take out its former 52-week high and trigger that breakout, since the stock cleared $4.28 a share with monster volume on September 30. Shares of HSOL have continued to soar higher since triggering that breakout, with the stock hitting a recent high of $5.66 a share. That represents a solid gain of over 30% from the time of my article for anyone who played this technical setup. I don't think shares of HSOL are done going higher either, so traders should look for more upside in this stock if it clears its new 52-week high at $5.66 with strong volume.

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.

Arotech

One stock that's quickly moving within range of triggering a big breakout trade is Arotech (ARTX), which is a defense and security products and services company. This stock is off to a booming start in 2013, with shares up big by 82%.

If you take a look at the chart for Arotech, you'll notice that this stock has just started to trend back above its 50-day moving average of $1.86 a share with strong upside volume. Volume so far today has already registered over 600,000 shares, which is well above its three-month average action of 226,678 shares. This spike back above the 50-day is starting to push shares of ARTX within range of triggering a big breakout trade.

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Traders should now look for long-biased trades in ARTX if it manages to break out above some near-term overhead resistance levels at $1.97 to $2.24 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 226,678 shares. If that breakout hits soon, then ARTX will set up to re-test or possibly take out its 52-week high at $2.71 a share. Any high-volume move above $2.71 will then give ARTX a chance to trend north of $3 a share.

Traders can look to buy ARTX off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $1.74 a share. One can also buy ARTX 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.

FX Energy

Another energy player that's starting to trend within range of triggering a major breakout trade is FX Energy (FXEN), which is an independent oil and gas exploration and production company with principal production, reserves and exploration in Poland and oil production, oilfield service and exploration activities in the U.S. This stock is off to a slow start in 2013, with shares off by 14%.

If you take a look at the chart for FX Energy, you'll notice that this stock has been trending sideways inside of a consolidation chart pattern for the last two months and change, with shares moving between $2.93 on the downside and $3.98 on the upside. Shares of FXEN are now starting to bounce higher off its 50-day moving average of $3.36 share, and it's 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 FXEN if it manages to break out above some key near-term overhead resistance levels at $3.62 to $3.71 a share and then above more resistance at $3.98 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 377,632 shares. If that breakout hits soon, then FXEN will set up to re-test or possibly take out its next major overhead resistance levels at $4.50 to $4.76 a share. Any high-volume move above those levels will then give FXEN a chance to tag or trend above $5 a share.

Traders can look to buy FXEN off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $3.15 or $2.93 a share. One could also buy FXEN 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.

Ebix

One software player that's rapidly moving within range of triggering a big breakout trade is Ebix (EBIX), which provides a series of application software products for the insurance industry ranging from carrier systems, agency systems and exchanges to custom software development for all entities involved in the insurance and financial industries. This stock has been slammed hard by the bears so far in 2013, with shares off by 28%.

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If you look at the chart for Ebix, you'll notice that this stock has been uptrending for the last month, with shares moving higher from its low of $9.25 to its intraday high of $11.65 a share. During that uptrend, shares of EBIX have been consistently making higher lows and higher highs, which is bullish technical price action. That move is quickly pushing shares of EBIX within range of trigger a major breakout trade that could push the stock into a massive gap down zone from last June.

Traders should now look for long-biased trades in EBIX if it manages to break out above some near-term overhead resistance levels at $11.74 to $12 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 1.06 million shares. If that breakout triggers soon, then EBIX will set up to re-fill some of its previous gap down zone from June that started near $20 a share. Some possible upside targets if EBIX gets into that gap with volume are $14 to $16 a share.

Traders can look to buy EBIX off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $10.87 a share or around more near-term support at $10.39 a share. One can also buy EBIX 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.

Amedisys

Another stock that looks poised to trigger a big breakout trade is Amedisys (AMED), which is engaged in delivering personalized health care services to patients and their families. This stock has been on fire so far in 2013, with shares up a whopping 61%.

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If you look at the chart for Amedisys, you'll notice that this stock has been trending sideways inside of a consolidation chart pattern right above its 50-day moving average at $16.92, with shares moving between $16.04 on the downside and $18.70 on the upside. Shares of AMED are now starting to spike higher right above its 50-day, and it's quickly moving within range of triggering a big breakout trade above the upper-end of its recent range.

Traders should now look for long-biased trades in AMED if it manages to break out above some near-term overhead resistance levels at $18.05 to its 52-week high at $18.70 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 444,954 shares. If that breakout triggers soon, then AMED will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $27 a share.

Traders can look to buy AMED off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $16.92 a share or below more near-term support at $16.62 a share. One can also buy AMED off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Pain Therapeutics

My final breakout trading prospect is Pain Therapeutics (PTIE), a biopharmaceutical company that develops novel drugs. It has four drug candidates in clinical programs, including Remoxy, Oxytrex, PTI-202 and a novel radio-labeled monoclonal antibody to treat metastatic melanoma. This stock is off to a slow start in 2013, with shares up just 3% so far.

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If you look at the chart for Pain Therapeutics, you'll notice that this stock has formed a major bottoming chart pattern over the last month and change, since shares have found buying interest each time it has pulled back to around $2.50 a share. This stock is now starting to spike higher off its 50-day moving average of $2.61 a share, and its flirting with its 200-day moving average at $2.83 a share. That move is quickly pushing shares of PTIE 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 PTIE if it manages to break out above some near-term overhead resistance at $3.05 a share with high volume. Look for a sustained move or close above $3.05 a share with volume that hits near or above its three-month average action of 280,177 shares. If that breakout triggers soon, then PTIE will set up to re-test or possibly take out its next major overhead resistance level at $3.45 a share. Any high-volume move above $3.45 will then give PTIE a chance to re-fill some of its previous gap down zone from May that started near $5.50 a share.

Traders can look to buy PTIE off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $2.58 to $2.46 a share. One could also buy PTIE off strength once it takes out $3.05 a share with volume and then simply use a stop that sits a conformable percentage from your entry point. I would add to either position once PTIE takes out $3.45 a share with solid upside volume.

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.