Stock Quotes in this Article: ALLT, AMSC, DHRM, ABBV, KING, TOUR

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 recent successful breakout trade is interactive entertainment player King Digital Entertainment (KING), which I featured in June 27's "5 Stocks Ready for Breakouts" at around $17.50 per share. I mentioned in that piece that shares of King Digital Entertainment were just starting to spike higher right off its 50-day moving average of $17.04 with decent upside volume. That spike was quickly pushing shares of KING within range of triggering a near-term breakout trade above a key downtrend line.

Guess what happened? Shares King Digital Entertainment triggered that breakout the same day as my article, and the stock never looked back, exploding higher to its new all-time high of $23.48 a share on July 2. That represents a massive of gain of well over 30% in just a few trading sessions for anyone who snapped up shares of KING in anticipation of that breakout. As you can see, trading breakouts that trigger with volume can produce monster moves in very short timeframes.

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.

AbbVie



One stock that's starting to trend within range of triggering a big breakout trade is AbbVie (ABBV), which is engaged in the discovery, development, manufacture and sale of pharmaceutical products worldwide This stock has been moving to the upside over the last three months, with shares up by 19%.

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If you take a look at the chart for AbbVie, you'll notice that this stock has been uptrending over the last three months and change, with shares moving higher from its low of $45.16 to its recent high of $57.83 a share. During that uptrend, shares of ABBV have been making mostly higher lows and higher highs, which is bullish technical price action. Shares of ABBV are now starting to spike higher right off its 50-day moving average of $53.77 and it's quickly moving within range of triggering a big breakout trade.

Traders should now look for long-biased trades in ABBV if it manages to break out above Friday's intraday high of $56.60 to its 52-week high at $58.27 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 5.79 million shares. If that breakout triggers soon, then ABBV will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $70 to $80 a share.

Traders can look to buy ABBV off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $53.77 to around $53 a share. One can also buy ABBV 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.

Dehaier Medical Systems



A health care player that's starting to move within range of triggering a near-term breakout trade is Dehaier Medical Systems (DHRM), which develops and distributes medical devices, and sleep respiratory and oxygen therapy products in the People's Republic of China. This stock is off to a hot start so far in 2014, with shares up sharply by 36%.

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If you take a look at the chart for Dehaier Medical Systems, you'll notice that this stock recently formed a double bottom chart pattern at $5.25 to $5.20 a share. Shares of DHRM are now starting to spike higher off those support levels and it's quickly moving 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 DHRM if it manages to break out above its 200-day moving average of $5.54 to its 50-day moving average at $5.67 a share and then once it takes out more resistance at around $6 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 142,552 shares. If that breakout kicks off soon, then DHRM will set up to re-test or possibly take out its next major overhead resistance levels at $7.08 to $7.15 a share.

Traders can look to buy DHRM off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support levels at $5.20 to right below $5 a share. One could also buy DHRM 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.

Tuniu


Another stock that's starting to move within range of triggering a major breakout trade is Tuniu (TOUR), which operates as an online leisure travel company in the People's Republic of China. This stock has been off to a red hot start in 2014, with shares up sharply by 74%.

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If you take a glance at the chart for Tuniu, you'll notice that this stock has been trending sideways and consolidating for the last month and change, with shares moving between $14.22 on the downside and $19.80 on the upside. Shares of TOUR are now starting to spike higher off some near-term support at $16.83 a share and it's quickly moving 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 TOUR if it manages to break out above some near-term overhead resistance levels at $18.45 to $19.55 and then once it clears more resistance at $19.72 to its all-time high at $19.80 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 466,000 shares. If that breakout hits soon, then TOUR will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $30 a share.

Traders can look to buy TOUR off weakness to anticipate that breakout and simply use a stop that sits just below some key near-term support levels at $16.83 to $16.40 a share or around $15 a share. One can also buy TOUR 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 Superconductor



An industrial goods player that's starting to trend within range of triggering a major breakout trade is American Superconductor (AMSC), which provides megawatt-scale solutions worldwide. This stock has been moving to the upside over the last three months, with shares higher by 14%.

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If you take a glance at the chart for American Superconductor, you'll notice that this stock has been uptrending strong for the last two months and change, with shares moving higher from its low of $1.25 to its recent high of $1.78 a share. During that uptrend, shares of AMSC have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of AMSC 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 AMSC if it manages to break out above its 200-day moving average of $1.70 a share to some more near-term overhead resistance at $1.78 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 763,864 shares. If that breakout materializes soon, then AMSC will set up to re-test or possibly take out its next major overhead resistance levels at $2.20 to around $2.40, or even $2.68 a share.

Traders can look to buy AMSC off weakness to anticipate that breakout and simply use a stop that sits right below some near-term support at $1.52 or around its 50-day at $1.45 a share. One can also buy AMSC 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.

Allot Communications



My final breakout trading prospect is communications equipment player Allot Communications (ALLT), which develops, markets and sells intelligent Internet protocol service optimization solutions in the Americas, the Middle East, Africa, Europe, Asia and Oceania. This stock is off to a weak start in 2014, with shares off notably by 14%.

If you look at the chart for Allot Communications, you'll see that this stock is starting to spike higher here right above some major support levels at $12.32 to around $12 a share with strong upside volume flows. Volume so far today has registered over 390,000 shares, which is well above its three-month average volume of 222,748 shares. This move is quickly pushing shares of ALLT within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in ALLT if it manages to break out above its 50-day moving average of $13.15 a share and then once it clears more key overhead resistance levels at $13.61 to $13.80 and then $14.09 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 222,748 shares. If that breakout gets underway soon, then ALLT will set up to re-test or possibly take out its next major overhead resistance levels at $15.50 to $16.50, or even $17 to $17.50 a share.

Traders can look to buy ALLT off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $12.32 to just below $12 a share. One can also buy ALLT off strength once it starts to clear 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.