Stock Quotes in this Article: ACTG, GENE, NLST, NTLS, OCLS, WPCS

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 health care player Oculus Innovative Sciences (OCLS), which I featured in Mar. 14's "5 Stocks Poised for Breakouts" at $4.09 share. I mentioned in that piece that shares of Oculus Innovative Sciences had been uptrending over the last month and change, with shares moving higher from a low of $2.92 to a recent high of $4.35 a share. That uptrend was starting to push shares of OCLS within range of triggering a major breakout trade above some key overhead resistance levels at $4.35 to $4.67 a share.

Guess what happened? Shares of Oculus Innovative Sciences started to challenge the first tier of those breakout levels on the same day that I wrote my article. This stock then exploded to the upside the following two trading sessions with massive upside volume blasting above all key near-term overhead resistance levels. This stock tagged an intraday high of $5.99 a share on March 18, which represents a monster gain of over 40% in just a few trading sessions. As you can see, when a stock breaks out with strong upside volume, it can quickly make an explosive move higher.

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Shares of OCLS might not be done going higher either, so traders should now watch for a high-volume move above that recent of $5.99 a share to signal that this stock could be setting up to re-test or possibly take out its 52-week high at $7.21 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.

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.

Acacia Research


One business services player that's quickly moving within range of triggering a big breakout trade is Acacia Research (ACTG), which acquires, develops, licenses and enforces patented technologies in the U.S. This stock has been hit hard by the bears over the last six months, with shares off by 29%.

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If you take a look at glance at the chart for Acacia Research, you'll notice that this stock has been uptrending for the last three months and change, with shares moving higher from its low of $12.13 to its recent high of $16.46 a share. During that uptrend, shares of ACTG have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of ACTG are spiking higher today right above some near-term support at $15.49 a share. That spike is quickly pushing shares of ACTG within range of triggering a big breakout trade.

Traders should now look for long-biased trades in ACTG if it manages to break out above some near-term overhead resistance at $16.46 a share with high volume. Look for a sustained move or close above that level with volume that registers near or above its three-month average volume of 663,333 shares. If that breakout hits soon, then ACTG will set up to re-test to re-fill some of its previous gap-down-day zone from last October that started near $20.50 a share.

Traders can look to buy ACTG off weakness to anticipate that breakout and simply use a stop that sits right around its 50-day moving average of $14.44 a share. One can also buy ACTG off strength once it starts to take $16.46 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Ntelos


A wireless communications player that's starting to trend within range of triggering a near-term breakout trade is Ntelos (NTLS), which provides digital wireless communications services to consumers and businesses in Virginia and West Virginia, as well as parts of Maryland, North Carolina, Pennsylvania, Ohio and Kentucky. This stock has been hammered hard by the bears so far in 2014, with shares off by 32%.

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If you take a look at the chart for Ntelos, you'll see that this stock has been downtrending badly for the last two months, with shares plunging lower from its high of $20.74 to its recent low of $12.40 a share. During that downtrend, shares of NTLS have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of NTLS are now starting to bounce off oversold territory and it's quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in NTLS if it manages to break out above some near-term overhead resistance levels at $13.33 to $13.88 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 413,243 shares. If that breakout materializes soon, then NTLS will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $15.77 to $15.83 a share or its 200-day moving average of $16.93 a share.

Traders can look to buy NTLS off weakness to anticipate that breakout and simply use a stop that sits right below Friday's low of $12.77 a share or below its recent low of $12.40 a share. One could also buy NTLS 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.

WPCS International


Another technology player that's starting to move within range of triggering a major breakout trade is WPCS International (WPCS), which provides design-build engineering services for communications infrastructure worldwide. This stock has been hit hard over the last six months, with shares off sharply by 51%.

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If you take a glance at the chart for WPCS International, you'll notice that this stock has formed a major bottoming chart pattern over the last month and change, with shares finding support at $1.55, $1.50 and $1.60 a share. Shares of WPCS have now started to spike higher off those levels and flirt with its 50-day moving average of $ 165 a share. This stock is now trending 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 WPCS if it manages to break out above some near-term overhead resistance levels at $1.75 a share and then once it takes out $1.90 to $1.92 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 1.98 million shares. If that breakout gets underway soon, then WPCS will set up to re-test or possibly take out its next major overhead resistance levels at $2.50 to its 200-day moving average at $2.72 a share. Any high-volume move above those levels will then give WPCS a chance to tag its next major overhead resistance levels at $3.40 a share.

Traders can look to buy WPCS off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support at $1.50 a share. One can also buy WPCS 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.

Genetic Technologies


Another health care player that's starting to trend within range of triggering a big breakout trade is Genetic Technologies (GENE), which provides genetic testing services primarily in Australia and the U.S. This stock has been hit hard by the sellers over the last six months, with shares moving sharply lower by 30%.

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If you consult the chart for Genetic Technologies, you'll notice that this stock has been downtrending over the last month and change, with shares moving lower from its high of $2.41 to its recent low of $1.51 a share. During that move, shares of GENE have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of GENE are starting to spike higher here back above its 50-day moving average of $1.62 a share. That move is quickly pushing GENE within range of triggering a big breakout trade above a key downtrend line.

Traders should now look for long-biased trades in GENE if it manages to break out above some near-term overhead resistance levels at $1.78 to $1.87 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 437,872 shares. If that breakout starts soon, then GENE will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $2.02 to $2.41 a share.

Traders can look to buy GENE off weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $1.51 to just below $1.40 a share. One can also buy GENE 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.

Netlist


My final breakout trading prospect is semiconductor player Netlist (NLST), which designs, manufactures and sells intelligent memory subsystems for the datacenter server, high-performance computing and communications markets worldwide. This stock has been in major play with the bulls so far in 2014, with shares up sharply by 191%.

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If you look at the chart for Netlist, you'll see that this stock has been uptrending strong for the last three months and change, with shares moving higher from its low of 53 cents per share to its recent high of $2.41 a share. During that uptrend, shares of NLST have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of NLST are spiking higher today with bullish upside volume flows and that spike is quickly pushing the stock within range of triggering a major breakout trade.

Traders should now look for long-biased trades in NLST if it manages to break out above some near-term overhead resistance levels at $2.17 to $2.30 a share and then once it takes out its 52-week high at $2.41 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 1.02 million shares. If that breakout triggers soon, then NLST will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $3 to $3.50, or even $4 a share.

Traders can look to buy NLST off weakness to anticipate that breakout and simply use a stop that sits right around its 50-day moving average of $1.71 a share. One can also buy NLST off strength once it starts to bust above 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.