Stock Quotes in this Article: APP, TSLA, BIRT, VNET, IQNT, VJET

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 business intelligence and information applications software player Actuate (BIRT), which I featured in May 15's "5 Stocks Ready for Breakouts" at $4 a share. I mentioned in that piece that shares of Actuate had recently gapped down sharply from over $5.50 to its 52-week low of $3.41 a share with heavy downside volume. Following that move, shares of BIRT were starting to rebound off its 52-week low and were beginning to move within range of triggering a major breakout trade that had the potential to take the stock back into its gap-down-day zone.

Guess what happened? Shares of BIRT didn't wait long to trigger that breakout, since the stock started to take out those breakout levels the following trading session with strong upside volume flows. Volume the following two trading sessions after my article hit 1.58 and 1.44 million, which is well above its three-month average action of 588,000 shares. This stock continued to uptrend the rest of the month with BIRT tagging an intraday high on May 28 of $4.82 a share. That represents a solid gain of 20% in just a few weeks for anyone who bought the stock ahead of the breakout.

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.

Tesla Motors

One auto manufacturer that's starting to move within range of triggering a big breakout trade is Tesla Motors (TSLA), which designs, develops, manufactures and sells electric vehicles and electric vehicle powertrain components. This stock is off to a hot start in 2014, with shares up a whopping 40%.

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If you take a look at the chart for Tesla Motors, you'll see that this stock has been uptrending strong for the last month, with shares moving higher off its May low of $177.22 to its intraday high of $214.80 a share. During that uptrend, shares of TSLA have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of TSLA within range of triggering a big breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in TSLA if it manages to break out above some near-term overhead resistance levels at $218.66 to $219.33 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 7.55 million shares. If that breakout starts soon, then TSLA will set up to re-test or possibly take out its next major overhead resistance levels at $235.73 to $240, or even $244 a share.

Traders can look to buy TSLA off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $206.34 or close to more near-term support at $200 a share. One can also buy TSLA 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.

Inteliquent

A wireless communications player that's starting to trend within range of triggering a near-term breakout trade is Inteliquent (IQNT), which provides voice telecommunications services on a wholesale basis in the U.S. and internationally. This stock has been red hot so far in 2014, with shares up 29%.

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If you take a look at the chart for Inteliquent, you'll notice that this stock has been uptrending strong for the last four months, with shares moving higher from its low of $10.67 to its recent 52-week high of $15.93 a share. During that uptrend, shares of IQNT have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of IQNT have recently crossed back above its 50-day moving average and it's now quickly moving within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in IQNT if it manages to break out above some near-term overhead resistance levels at $15.45 to its 52-week high of $15.93 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 422,452 shares. If that breakout hits soon, then IQNT will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $20 to $25 a share.

Traders can look to buy IQNT off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $14.30 or around some more major support at $13 a share. One could also buy IQNT 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.

Voxeljet AG

Another 3D printing player that's starting to move within range of triggering a big breakout trade is Voxeljet AG (VJET), which provides three-dimensional printers and on-demand parts services to industrial and commercial customers. This stock has been destroyed by the bears so far in 2014, with shares down a whopping 63%.

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If you take a glance at the chart for Voxeljet AG, you'll see that this stock has been consolidating and trending sideways for the last few weeks, with shares moving between its 52-week low of $12.85 on the downside and right around $15 on the upside. Shares of VJET have now started to bounce higher off its 52-week low of $12.85 and it's now quickly moving within range of triggering a breakout trade above the upper-end of its recent sideways trading chart pattern.

Traders should now look for long-biased trades in VJET if it manages to break out above some near-term overhead resistance levels at $14.77 to $15 a share with high volume. Watch for a sustained move or close above those levels with volume that registers near or above its three-month average action of 531,736 shares. If that breakout gets underway soon, then VJET will set up to re-test or possibly take out its next major overhead resistance levels at $16.28 to $17.74 a share, or even its 50-day moving average of $17.95 a share.

Traders can look to buy VJET off weakness to anticipate that breakout and simply use a stop that sits right around its 52-week low of $12.85 a share. One can also buy VJET off strength once it starts to take out those breakout levels share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

American Apparel

Another apparel clothing player that's starting to trend within range of triggering a big breakout trade is American Apparel (APP), which designs, manufactures, distributes, retails and sells branded fashion basic apparel products, and clothing and accessories for women, men, children and babies. This stock has been hammered lower so far in 2014, with shares down sharply by 48%.

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If you look at the chart for American Apparel, you'll see that this stock is starting to rip higher today right off its 50-day moving average of 60 cents per share. That strong uptick higher is starting to push shares of APP within range of triggering a big breakout trade above a key downtrend line. That downtrend line has been in place as resistance for shares of APP for the last month, so a break above it could lead to a fast and quick move higher.

Traders should now look for long-biased trades in APP if it manages to break out above some near-term overhead resistance levels at 65 to 68 cents per 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 2.62 million shares. If that breakout materializes soon, then APP will set up to re-test or possibly take out its next major overhead resistance levels at 75 to 82 cents per share. Any high-volume move above those levels will then give APP a chance to tag 90 cents per share.

Traders can look to buy APP off weakness to anticipate that breakout and simply use a stop that sits just below its 50-day moving average of 60 cents per share or near more support at 57 cents per share. One can also buy APP off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

21Vianet Group


My final breakout trading prospect is information technology services player 21Vianet Group (VNET), which provides carrier-neutral Internet data center services to Internet companies, government entities, blue-chip enterprises and small to mid-sized enterprises in the People's Republic of China. This stock has been trading red hot over the last six months, with shares up sharply by 51%.

If you look at the chart for 21Vianet Group, you'll see that this stock is spiking sharply higher here right off its 50-day moving average of $25.97 with strong upside volume flows. Volume so far today has already registered over 1.2 million shares, which is eclipsing its three-month average volume of 1.06 million shares. This sharp spike higher today with volume is quickly pushing shares of VNET 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 VNET if it manages to break out above some near-term overhead resistance levels at $27.68 to $28.15 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 1.06 million shares. If that breakout kicks off soon, then VNET will set up to re-test or possibly take out its next major overhead resistance levels at $30.25 to its 52-week high of $32.19 share. Any high-volume move above $32.19 will then push VNET into new 52-week-high territory, which is bullish technical price action.

Traders can look to buy VNET off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $25 to $24 a share One can also buy VNET 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.