Stock Quotes in this Article: ELN, ISRG, NOV, TNP, ORIG

 WINDERMERE, Fla. (Stockpickr) -- Stocks struggled for direction Friday, one day after the S&P 500 hit 1,400 for the first time in nearly four years. The Dow Jones Industrial Average registered its seventh straight day of gains on Thursday and closed at its highest level since December of 2007, while the Nasdaq closed at its highest level since November of 2000.

The recent up move in the markets has taken many traders by surprise, which goes to show that following the prevailing trend will give you the highest probability of making money. Many traders have been trying to pick tops in the market and leading stocks, but that has shown to be the wrong move to make.

At last check, the Dow was trading up 6 points, and the S&P 500 was trading up 2 points. The tech-heavy Nasdaq was moving higher by 2 points. The Dow Jones Industrial Average is now squarely above its key psychological level of 13,000. The Nasdaq is also 55 points above its key psychological level of 3,000. If the market can continue to trend higher and hold these psychological levels, then a number of sectors and stocks re going to break out and trend much higher.

>>5 Big Stocks to Trade for Gains

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.

Here's a look at five stocks are setting up to break out and trade higher from current levels.

Intuitive Surgical

One medical equipment and supplies player that’s trading within range of a big breakout is Intuitive Surgical (ISRG), which designs, manufactures and markets da Vinci Surgical Systems and related instruments and accessories. This stock is off to a decent start in 2012, with shares up over 13%.

If you take a look at the chart for Intuitive Surgical, you’ll notice that this stock has been uptrending strong for the past six months, rising from its October low of $341.21 to its current price of around $527. During that uptrend, this stock has consistently made higher lows and higher highs, which is bullish price action. Now ISRG is trading within range of triggering a near-term breakout.

Market players should watch ISRG for a breakout trade if this stock can manage to take out some near-term overhead resistance at $533 a share with high volume. Look for a sustained high-volume move or close above that level that registers near or well above its three-month average volume of 343,716 shares. If we get that action soon, look for ISRG to make a run at $550 or higher in the near future.

Traders should look for long biased trades in ISRG if that breakout does trigger soon with decent to high-volume. I would use some near-term support at around $520 as a mental stop if you buy off weakness. You could also just buy off strength and get long once $533 is taken out with volume.

Intuitive Surgical, which shows up on a list of Health Care Stocks Bought and Sold by Hedge Funds, was also featured this week in "5 Rocket Stocks Ready to Launch Higher."

National Oilwell Varco

Another stock that’s just starting to breakout today is oil well services and equipment player National Oilwell Varco (NOV), a worldwide provider of equipment and components used in oil and gas drilling and production operations, oilfield services, and supply chain integration services to the upstream oil and gas industry. This stock is off to a strong start in 2012, with shares up over 23%.

If you take a look at the chart for National-Oilwell Varco, you’ll notice that this stock has been uptrending nicely for the past six months, with shares making mostly higher lows and higher highs. Shares of NOV have recently been riding right along its 50-day moving average, and finding buying interest whenever it touches that key technical level. Now NOV is starting to trigger a breakout above some near-term overhead resistance.

Traders should watch NOV for a breakout trade if this stock can manage to sustained a high-volume move and close above $82.67 a share on heavy volume. Look for volume on a move above that level that registers near or well above its three-month average action of 3.6 million shares. At last check, NOV has hit a daily high of $83.86 and volume is tracking in strong at over 2.8 million shares traded.

Market players should now look for long biased trades in NOV as long as this stock is trending above that near-term breakout level of $82.67 with strong upside volume flows. There’s a good chance that if this breakout is the real deal, that NOV is going to re-test its recent high of $87.59 a share, or possibly trend much higher.

NOV, which shows up on a list of 15 Best Stocks at Top-Performing Mutual Funds, was also featured recently in "5 Cash-Rich Stocks to Buy in 2012."

Elan

One stock in the biotechnology and drugs complex that’s just starting to trigger a breakout trade today is Elan (ELN), a neuroscience-based biotechnology company. Elan is focused on discovering and developing advanced therapies in neurodegenerative and autoimmune diseases. This stock hasn’t done much in 2012, with shares up just 7.5%.

A Jefferies analyst today light a fire under this stock after they said the stock should start moving ahead of bapi data. Those comments have pushed shares of Elan into new 52-week-high territory.

If you look at the chart for Elan, you’ll see that this stock has been trading range bound for the past few months, between $14.40 on the upside and around $12 on the downside. Now just today shares of ELN are starting to break out above that near-term overhead resistance at $14.40 with monster volume.

>>6 Hot Stocks on Traders' Radars

At last check, volume today is already over 5.1 million shares which is well above its three-month average action of 3.36 million shares. Volume on Thursday (also up day) was also huge with 6.73 million shares traded.

Traders should now watch ELN for a sustained high-volume move and close above $14.40 a share to signal that this stock wants to trend significantly higher. I would also look for ELN to close near its daily highs today as a sign of strength. If we get that action today or soon, then look for ELN to make a run at $20 a share or possibly much higher.

Traders should now look for long biased trades in ELN as long as the stock is trending above that key breakout level of $14.40 a share. I would simply use a mental stop that’s a few percentage points below $14.40 if you get long into this strength, in case this breakout fails.

Tsakos Energy Navigation

One name in the water transportation complex that’s trading within range of triggering a major breakout is Tsakos Energy Navigation (TNP), a provider of international seaborne crude oil and petroleum product transportation services. This stock has been blazing a trail so far in 2012, with shares up around 50%.

If you look at the chart for Tsakos Energy Navigation, you’ll notice this stock formed a double bottom back in early 2012 at around $4.78 to $4.84 a share. After marking that bottom, the stock has taken off and soared towards its current price of $7.30 a share. In just the last few hours this stock has started to trigger a major breakout trade above some key overhead resistance levels at $7.08 to $7.20 with huge volume. At last check, volume today is already over 335,000 shares and the stock is trading at $7.26. That volume is well above its average action of 135,796 shares.

Traders should now look for long-biased trades in TNP as long as this stock is trending above those key breakout levels of $7.08 to $7.20 a share with strong upside volume flows. If this breakout is the real deal, then TNP has a great chance to trade back towards $10 a share or higher in the near future. The reason it could move that high is because there’s little overhead resistance to contend with above $7.20 a share.

If you get long off strength or weakness, I would simply use a mental stop that’s just below $7.08 or near today’s low of $6.80 a share. If this breakout is the real deal, then I don’t expect those levels to get breached by much.

Tsakos is one of the highest-yielding transportation stocks.

Ocean Rig UDW

One final stock that’s trading within range of triggering a big breakout is Ocean Rig UDW (ORIG), a Marshall Islands-registered international offshore drilling contractor. This stock is off to a monster start in 2012 with shares up over 40%.

If you look at the chart for Ocean Rig UDW, you’ll notice that this stock bottomed in early 2012 at around $11.70 a share. Since marking that bottom, the stock has soared and up trended towards its current price of around $17.30. That big run-up now puts ORIG within range of breaking above two key technical overhead resistance levels. If that breakout does trigger soon, then it will push ORIG into all-time high territory.

Market players should now look for long-biased trades in ORIG if this stock can manage to take out some overhead resistance at $18.15 to $18.73 with high-volume. Look for a sustained high-volume move and close above those levels that are near or well above its three-month average action of 147,525 shares. If we get that action soon, then ORIG could easily spike above $20 a share very quickly.

One could look to be a buyer of ORIG off any weakness and simply use a stop at around $16.50 to $16.36 a share, and simply anticipate the future breakout. You could also buy off strength and get long once $18.15 or $18.73 is taken out with volume.

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

-- Written by Roberto Pedone in Winderemere, Fla.

RELATED LINKS:

>>5 Stocks Insiders Love Right Now
>>7 Dividend Stocks That Want to Pay You More Money

>>5 Industrial Stocks Funds Love for 2012

Follow Stockpickr on Twitter and become a fan on Facebook.

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 stocks, options, futures, commodities and currencies. He is also an outside contributor to Beconequity.com and maintains the website Maddmoney.net, which he sold to Blue Wave Advisors in 2008. Roberto studied International Business at The Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany.