5 Stocks Ready to Break Out

Tickers in this article: AMAG GERN IRDM ISIS LCAV ZLC
WINDERMERE, Fla. ( 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 that can ultimately push the stock significantly higher.

An example of a recent successful breakout trade is biotechnology and drugs stock Isis Pharmaceuticals (ISIS), which I featured in Dec. 14's " 5 Breakout Stocks to See " at $9.83 a share. I mentioned in that piece that shares of ISIS were uptrending strong and moving within range of both its 50-day and 200-day moving averages. I told readers to watch for a major breakout to trigger if ISIS took out both of those key moving averages with high volume.

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Guess what happened? Shares of ISIS went on to break back above both of those moving averages with bullish upside volume flows. The stock has now skyrocketed to its intraday high today of $14.45 a share, which is a huge gain from where the stock was trading at when I wrote the article. Shares of ISIS have now reached overbought levels, since its current relative strength index reading is 84.46.

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 .

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One stock that's trending very close to triggering a near-term breakout trade is Iridium Communications (IRDM) , which provides satellite voice and data communications solutions with coverage of the entire Earth, including oceans, airways and Polar Regions. This stock has been thrashed by the sellers during the last six months, with shares down by 23%.

If you take a look at the chart for Iridium Communications, you'll notice that this stock has been trending sideways for the last few weeks, with shares moving between $6.71 on the downside and $7.25 on the upside. Shares of IRDM are starting to bounce today off that $6.71 low and quickly move within range of triggering a near-term breakout trade.