DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.
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Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."
Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.
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With that in mind, let's take a look at several stocks rising on unusual volume recently.
Intrexon
Intrexon (XON), a biotechnology company, operates in the synthetic biology field. Synthetic biology is a discipline that applies engineering principles to biological systems. This stock closed up 12.8% at $17.49 in Wednesday's trading session.
Wednesday's Volume: 1.92 million
Three-Month Average Volume: 845,131
Volume % Change: 157%
From a technical perspective, XON skyrocketed higher here with strong upside volume flows. This stock has been downtrending badly for the last two months, with shares moving lower from its high of $31.70 to its recent 52-week low of $13.13. During that downtrend, shares of XON have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of XON have now started to rebound sharply off that $13.13 low and it's now moving within range of triggering a near-term breakout trade. That trade will hit if XON manages to take out Wednesday's intraday high of $18.39 to some more near-term overhead resistance at $19.23 with high volume.
Traders should now look for long-biased trades in XON as long as it's trending above $16 or above $15.50 and then once it sustains a move or close above those breakout levels with volume that's near or above 845,131 shares. If that breakout kicks off soon, then XON will set up to re-test or possibly take out its next major overhead resistance levels at $21.40 to its 50-day moving average of $22.97, or even $24.
Dominion Resources
Dominion Resources (DCUA), together with its subsidiaries, engages in producing and transporting energy in the U.S. This stock closed up 1.1% at $57.57 in Wednesday's trading session.
Wednesday's Volume: 185,000
Three-Month Average Volume: 73,454
Volume % Change: 132%
From a technical perspective, DCUA spiked modestly higher here right off its 50-day moving average of $57.19 with above-average volume. This spike higher on Wednesday is starting to push shares of DCUA within range of triggering a big breakout trade. That trade will hit if DCUA manages to take out some near-term overhead resistance levels at $58 to $58.50 and then once it clears its all-time high of $59.17 with high volume.
Traders should now look for long-biased trades in DCUA as long as it's trending above some key near-term support levels at $56.67 to $56.14 and then once it sustains a move or close above those breakout levels with volume that's near or above 73,454 shares. If that breakout starts soon, then DCUA will set up to enter new all-time-high territory above $59.17, which is bullish technical price action. Some possible upside targets off that breakout are $65 to $70.
Zulily
Zulily (ZU) operates as an online retailer. This stock closed up 9.3% to $34.99 in Wednesday's trading session.
Wednesday's Volume: 9.45 million
Three-Month Average Volume: 1.51 million
Volume % Change: 597%
From a technical perspective, ZU spiked sharply higher here with monster upside volume. This move is quickly pushing shares of ZU within range of triggering a near-term breakout trade. That trade will hit if ZU manages to take out Wednesday's high of $36.37 to its recent gap-down-day high of $37.38 with high volume.
Traders should now look for long-biased trades in ZU as long as it's trending above $32.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.51 million shares. If that breakout hits soon, then ZU will set up to re-fill some of its previous gap-down-day zone from earlier this month that started near $50.
Kate Spade
Kate Spade (KATE), together with its subsidiaries, primarily designs and markets a range of apparel and accessories. This stock closed up 8.5% to $37.60 in Wednesday's trading session.
Wednesday's Volume: 5.40 million
Three-Month Average Volume: 2.14 million
Volume % Change: 162%
From a technical perspective, KATE exploded higher here back above its 50-day moving average of $35.80 and into breakout territory above some near-term overhead resistance at $36.32 with strong upside volume. Market players should now look for a continuation move to the upside in the short-term if KATE manages to take out Wednesday's intraday high of $38.32 with high volume.
Traders should now look for long-biased trades in KATE as long as it's trending above $36.32 or above its 50-day at $35.80 and then once it sustains a move or close above $38.32 with volume that hits near or above 2.14 million shares. If that move gets underway soon, then KATE will set up to re-test or possibly take out its 52-week high at $40.75.
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To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume 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.
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