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5 Stocks Poised for Major Breakouts

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, it's free to find new buyers and momentum players who can ultimately push the stock significantly higher.

Breakout candidates are something that

These are also the exact type of stocks I love to trade.

I frequently flag high-probability setups, breakout plays and stocks that are acting technically bullish. These are the ones 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, 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 possibly trade higher from current levels.

Calithera Biosciences

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One clinical-stage biopharmaceuticals player that's starting to move within range of triggering a near-term breakout trade is Calithera Biosciences (CALA) , which focuses on discovering and developing small molecule drugs directed against tumor metabolism and tumor immunology targets for the treatment of cancer in the U.S. This stock has been hammered by the sellers over the last six months, with shares falling sharply by 47%.

If you take a look at the chart for Calithera Biosciences, you'll notice that this stock recently formed a double-bottom chart pattern, after shares found some buying interest at $2.90 to $2.87 a share over the last four months. Following that potential bottom, this stock has now started to trend a bit higher off those support levels, and it's beginning to move within range of triggering a near-term breakout trade above some key overhead resistance levels.

Traders should now look for long-biased trades in Calithera Biosciences, if it manages to break out above some near-term overhead resistance levels at $3.06, to its 50-day moving average of $3.14, then above more resistance at $3.20 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 194,875 shares. If that breakout hits soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $3.40 to $3.66, or even $3.85 to $4 a share.

Traders can look to buy Calithera Biosciences off weakness to anticipate that breakout and simply use a stop that sits right around those recent double-bottom support levels. One can also buy this stock 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.


Tonix Pharmaceuticals

A health care player that's starting to spike within range of triggering a big breakout trade is Tonix Pharmaceuticals (TNXP) , which engages in developing medicines for common disorders of the central nervous system. This...


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