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.
With that in mind, let's take a look at several stocks rising on unusual volume recently.
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Stemline Therapeutics
Stemline Therapeutics (STML), a clinical-stage biopharmaceutical company, focuses on the discovery, acquisition, development and commercialization of proprietary therapeutics for cancer stem cells and bulk tumors in the U.S. This stock closed up 14.5% at $12.18 in Monday's trading session.
Monday's Volume: 397,000
Three-Month Average Volume: 134,530
Volume % Change: 189%
From a technical perspective, STML exploded sharply higher here right above its 52-week low of $10.50 with strong upside volume flows. This large move to the upside on Monday also pushed shares of STML into breakout territory, since this stock took out some near-term overhead resistance levels at $11.81 to its 50-day moving average of $12.18. This move is now quickly pushing shares of STML within range of triggering another big breakout trade. That trade will hit if STML manages to take out Monday's intraday high of $12.22 to some more near-term overhead resistance at $12.50 with high volume.
Traders should now look for long-biased trades in STML as long as it's trending above $11.81 or above $11.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 134,530 shares. If that breakout kicks off soon, then STML will set up to re-test or possibly take out its next major overhead resistance levels at $13.75 to $13.82. Any high-volume volume above those levels will then give STML a chance to tag $15 to $16.
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Nice Systems
Nice Systems (NICE) provides software solutions that enable organizations to take action in order to improve customer experience and business results, ensure compliance, fight financial crime and safeguard people and assets. This stock closed up 2.6% at $40.05 in Monday's trading session.
Monday's Volume: 388,000
Three-Month Average Volume: 161,956
Volume % Change: 135%
From a technical perspective, NICE jumped higher here back above its 50-day moving average of $39.53 with above-average volume. This stock has been uptrending over the last few weeks, with shares moving higher from its low of $37.84 to its intraday high of $40.09. During that uptrend, shares of NICE have been consistently making higher lows and higher highs, which is bullish technical price action. This move is now starting to push shares of NICE within range of triggering a big breakout trade . That trade will hit if NICE manages to clear its 200-day moving average of $40.16 to some more key overhead resistance levels at $41.08 to $41.10 with high volume.
Traders should now look for long-biased trades in NICE as long as it's trending above some key near-term support at around $38.50 and then once it sustains a move or close above those breakout levels with volume that's near or above 161,956 shares. If that breakout develops soon, then NICE will set up to re-test or possibly take out its next major overhead resistance levels at $43 to $44, or even $45 to its 52-week high at $46.07.
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Globus Medical
Globus Medical (GMED), a medical device company, focuses on the design, development, and commercialization of musculoskeletal implants that promote healing in patients with spine disorders. This stock closed up 2.6% at $18.94 in Monday's trading session.
Monday's Volume: 1.16 million
Three-Month Average Volume: 620,855
Volume % Change: 115%
From a technical perspective, GMED jumped to the upside here right above some near-term support at $18.03 with above-average volume. This trend higher on Monday briefly pushed shares of GMED into breakout territory, since the stock flirted with some near-term overhead resistance at $18.99. Shares of GMED gapped down sharply lower in early August from over $22 to $17.45 with heavy downside volume flows. Shares of GMED are now starting to push within range of triggering a major breakout trade. That trade will hit if GMED manages to take out Monday's intraday high of $19.12 to some more key resistance at around $19.50 with high volume.
Traders should now look for long-biased trades in GMED as long as it's trending above some key near-term support at $18.03 and then once it sustains a move or close above those breakout levels with volume that's near or above 620,855 shares. If that breakout triggers soon, then GMED will set up to re-fill some of its previous gap-down-day zone from August that started above $22.
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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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