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.
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.
KEYW Holding
KEYW Holding (KEYW), through its subsidiaries, provides mission-critical cybersecurity, cyber superiority, and geospatial intelligence solutions to the U.S. Government defense, intelligence, and national security agencies, and commercial enterprises. This stock closed up 5.5% to $10.70 in Monday's trading session.
Monday's Volume: 1.27 million
Three-Month Average Volume: 601,773
Volume % Change: 108%
From a technical perspective, KEYW ripped higher here right off its recent low of $9.98 with above-average volume. This stock has been downtrending badly for the last two months and change, with shares sliding lower from its high of $23.09 to its recent 52-week low of $9.98. During that downtrend, shares of KEYW have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of KEYW are now starting to rebound off its 52-week low of $9.98 with strong upside volume flows. This move could be signaling a trend change is in the cards for KEYW in the short-term.
Traders should now look for long-biased trades in KEYW as long as it's trending above Monday's low of $10.31 or above its 52-week low of $9.98 and then once it sustains a move or close above Monday's high of $11.15 to some more near-term overhead resistance at $11.50 with volume that hits near or above 601,773 shares. If that move kicks off soon, then KEYW will set up to re-test or possibly take out its next major overhead resistance levels at $13.35 to its 200-day moving average of $14.37.
InterMune
InterMune (ITMN), a biotechnology company, focuses on the research, development, and commercialization of therapies for pulmonology and orphan fibrotic diseases in North America and Europe. This stock closed up 13.4% at $38.92 in Monday's trading session.
Monday's Volume: 11.92 million
Three-Month Average Volume: 3.56 million
Volume % Change: 350%
From a technical perspective, ITMN gapped sharply higher here right above its 50-day moving average of $32.38 with heavy upside volume. This monster spike higher on Monday pushed shares of ITMN into breakout and 52-week-high territory, since the stock took out some near-term overhead resistance levels at $36.71 to its former 52-week high of $38.73. Market players should now look for a continuation move to the upside in the short-term if ITMN manages to clear Monday's intraday high of $39.90 with strong volume.
Traders should now look for long-biased trades in ITMN as long as it's trending above $37 or above Monday's low of $35.85 and then once it sustains a move or close above $39.90 with volume that this near or above 3.56 million shares. If that move starts soon, then ITMN will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $45 to $50.
Guidewire Software
Guidewire Software (GWRE) provides system software to the property and casualty insurance industry primarily in the U.S., Canada, Australia, the United Kingdom, and internationally. This stock closed up 4.6% at $37.57 in Monday's trading session.
Monday's Volume: 1.14 million
Three-Month Average Volume: 673,646
Volume % Change: 96%
From a technical perspective, GWRE ripped higher here right above its recent 52-week low of $33.66 with strong upside volume flows. This stock has been downtrending badly for the last two months and change, with shares moving lower from its high of $58 to its 52-week low of $33.66. During that move, shares of GWRE have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of GWRE are now starting to rebound off its 52-week low of $33.66 with bullish upside volume flows. This spike higher on Monday could be signaling that shares of GWRE are ready to enter a new uptrend in the short-term.
Traders should now look for long-biased trades in GWRE as long as it's trending above Monday's low of $35.68 and then once it sustains a move or close above Monday's high of $37.84 to some more near-term resistance at $39.91 with volume that hits near or above 673,646 shares. If that move begins soon, then GWRE will set up to re-test or possibly take out its next major overhead resistance levels at $43.30 to its 50-day at $43.85, or even its 200-day at $46.58.
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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