Stock Quotes in this Article: GMO, UNXL, USEG, REE, 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 energy services player Recon Technology (RCON), which I featured in Feb. 6's "5 Stocks Under $10 Set to Soar" at $4.50 share. I mentioned in that piece that shares of RCON had been uptrending strong over the last few months, soaring higher from a low of $2.84 to a recent high of $5.06 a share. This stock has just started to cross back above its 50-day moving average and that move was quickly pushing shares of RCON within range of triggering a major breakout trade above some key resistance levels at $4.75 to $5.06 and then $5.80 a share.

Guess what happened? Shares of RCON started to challenge those resistance levels the following week, with shares ripping higher above $4.75 to $5.06 on Feb. 11. Then on Feb. 13 shares of RCON exploded to the upside taking out its 52-week high at $5.80 a share after the stock tagged an intraday high of $6.33 a share. That represents a gain of 40% for anyone who bought this stock around $4.50 and anticipated that breakout. I don't think this stock is anywhere near done going higher and if we can take out and close above $6.33 with volume soon, then $8 to $10 a share is very achievable.

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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.

Voxeljet


One technology player that's starting to trend within range of triggering a big breakout trade is Voxeljet (VJET), which is provides three-dimensional printers and on-demand parts services. This stock has been hit hard by the sellers over the last three months, with shares down by 33.5%.

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If you take a look at the chart for Voxeljet, you'll notice that this stock has been downtrending badly over the last month and change, with shares moving lower from its high of $47.98 to its recent low of $29.28 a share. During that downtrend, shares of VJET have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of VJET recently tested some previous support right below $30 a share and so far has held that level. This stock has now started to uptrend a bit off its low of $29.28 and it's starting to move within range of triggering a big breakout trade above a key downtrend line.

Traders should now look for long-biased trades in VJET if it manages to break out above some near-term overhead resistance levels at $36 to $37.75 a share and then once it clears its 50-day moving average of $38.37 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 1.79 million shares. If that breakout hits soon, then VJET will set up to re-test or possibly take out its next major overhead resistance levels at $43 to $48 a share.

Traders can look to buy VJET off any weakness to anticipate that breakout and simply use a stop that sits right around some near-term support at $33.55 or just below $30 a share. One can also buy VJET 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.

Rare Element Resources


A basic materials player that's starting to trend within range of triggering a big breakout trade is Rare Element Resources (REE), which engages in the acquisition, exploration and development of mineral properties. This stock has been moving lower over the last six months, with shares off by 23%.

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If you take a look at the chart for Rare Element Resources, you'll notice that this stock recently spiked higher back above its 50-day moving average of $1.52 a share. That move is starting to push shares of REE within range of triggering a big breakout trade back above a key downtrend line that dates back to October of last year.

Traders should now look for long-biased trades in REE if it manages to break out above some key near-term overhead resistance levels at $1.80 to $1.90 a share and then above its 200-day at $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 247,358 shares. If that breakout triggers soon, then REE will set up to re-test or possibly take out its next major overhead resistance levels at $2.22 to $2.50 a share.

Traders can look to buy REE off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $1.52 a share or near more support at $1.40 a share. One could also buy REE 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.

Uni-Pixel


Another technology player that's quickly moving within range of triggering a near-term breakout trade is Uni-Pixel (UNXL), which delivers performance-engineered films to the display, touch screen and flexible electronics market segments in the U.S. This stock has been hit hard by the sellers over the last six months, with shares off by 38%.

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If you take a look at the chart for Uni-Pixel, you'll notice that this stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $8.87 to its intraday high of $10.74 a share. During that uptrend, shares of UNXL have been consistently making higher lows and higher highs, which is bullish technical price action. That move has also pushed shares of UNXL back above its 50-day moving average of $10.40 a share and it's quickly moving the stock within range of triggering a near-term breakout trade.

Traders should now look for long-biased trades in UNXL if it manages to break out above some near-term overhead resistance at $10.96 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 474,889 shares. If that breakout triggers soon, then UNXL will set up to re-fill some of its previous gap-down-day zone from last December that started at $12 a share. This stock could even tag $13 if we get into that gap with strong upside volume.

Traders can look to buy UNXL off any weakness to anticipate that breakout and simply use a stop that sits just below $10 a share. One can also buy UNXL off strength once it starts to take out $10.96 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Make note that UNXL is due to report earnings on February 26, so it might be best to look for a quick trade here ahead of that important event.

General Moly


Another basic materials player that's starting to move within range of triggering a big breakout trade is General Moly (GMO), which engages in the exploration, development and mining of molybdenum properties primarily in the U.S. This stock has been hit hard by the bears over the last six months, with shares down by 32%.

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If you look at the chart for General Moly, you'll notice that this stock has been downtrending over the last month and change, with shares moving lower from its high of $1.54 to its recent low of $1.15 a share. During that downtrend, shares of GMO have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of GMO have now started to trend back above its 50-day moving average of $1.25 a share and the stock is making higher lows on a longer-term timeframe. Shares of GMO are now quickly moving within range of triggering a big breakout trade above a key downtrend line.

Traders should now look for long-biased trades in GMO if it manages to break out above some near-term overhead resistance levels at $1.30 to $1.35 a share and then once it takes out some more key overhead resistance at $1.41 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 344,508 shares. If that breakout hits soon, then GMO will set up to re-test or possibly take out its next major overhead resistance levels at $1.54 to its 200-day moving average of $1.64 a share. Any high-volume move above those levels could easily send GMO back towards $1.80 to $2 a share.

Traders can look to buy GMO off any weakness to anticipate that breakout and simply use a stop that sits right around some key near-term support levels at $1.19 to $1.15 a share. One can also buy GMO 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.

U.S. Energy


My final breakout trading prospect is energy player U.S. Energy (USEG), which focuses on the acquisition and development of oil and gas producing properties in the continental U.S. This stock has been red hot over the last six months, with shares soaring higher by 90%.

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If you look at the chart for U.S. Energy, you'll notice that this stock has been trending sideways and consolidating for the last three months and change, with shares moving between $3.02 on the downside and $4.06 on the upside. Shares of USEG have just started to cross back above its 50-day moving average of $3.49 a share. That move is quickly pushing shares of USEG within range of triggering a major breakout trade above the upper-end of its recent sideways trading chart pattern.

Traders should now look for long-biased trades in USEG if it manages to break out above some near-term overhead resistance levels at $3.67 to $3.80 a share and then once it takes out its 52-week high at $4.06 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 185,351 shares. If that breakout triggers soon, then USEG will set up to enter new 52-week-high territory above $4.06, which is bullish technical price action. Some possible upside targets off that breakout are $5 to $5.50 a share.

Traders can look to buy USEG off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $3.20 or at $3.15 a share. One can also buy USEG 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.