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.
Ubiquiti Networks
Ubiquiti Networks (UBNT), together with its subsidiaries, offers a portfolio of networking products and solutions for service providers and enterprises. This stock closed up 3.7% at $42.46 in Friday's trading session.
Friday's Volume: 3.77 million
Three-Month Average Volume: 1.08 million
Volume % Change: 273%
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From a technical perspective, UBNT spiked higher here back above its 50-day moving average of $42.14 with strong upside volume. This move briefly pushed shares of UBNT into breakout territory, since the stock flirted with some near-term overhead resistance levels at $42.60 to $45.31. Shares of UBNT tagged an intraday high of $45.39 before closing well off that level at $42.46. Market players should now look for a continuation move higher in the short-term if UBNT can manage to take out Friday's high of $45.39 to its all-time high at $48 with strong volume.
Traders should now look for long-biased trades in UBNT as long as it's trending above Friday's low of $41.03 and then once it sustains a move or close above $45.39 to $48 with volume that hits near or above 1.08 million shares. If we get that move soon, then UBNT will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $55 to $60.
ChannelAdvisor
ChannelAdvisor (ECOM) provides software-as-a-service solutions worldwide. This stock closed up 3.6% at $41.52 in Friday's trading session.
Friday's Volume: 1.32 million
Three-Month Average Volume: 309,727
Volume % Change: 343%
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From a technical perspective, ECOM spiked sharply higher here back above its 50-day moving average of $41.38 with heavy upside volume. This stock has been downtrending over the last month, with shares moving lower from its high of $49.75 to its recent low of $37.87. During that move, shares of ECOM have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of ECOM now look ready to possibly reverse its downtrend and enter a new uptrend, since the stock recaptured its 50-day on Friday with volume.
Traders should now look for long-biased trades in ECOM as long as it's trending above $40 and then once it sustains a move or close above Friday's high of $43.59 with volume that's near or above 309,737 shares. If we get that move soon, then ECOM will set up to re-test or possibly take out its next major overhead resistance levels at $47.25 to its all-time high at $49.75.
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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