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.
500.com
500.com (WBAI) provides online sports lottery services in the People's Republic of China. This stock closed up 6.5% to $35.59 in Monday's trading session.
Monday's Volume: 840,000
Three-Month Average Volume: 376,644
Volume % Change: 94%
From a technical perspective, WBAI bounced sharply higher here right above some near-term support at $32.82 and back above its 50-day moving average of $34.07 with above-average volume. This bounce higher on Monday is quickly pushing shares of WBAI within range of triggering a near-term breakout trade. That trade will hit if WBAI manages to take out Monday's intraday high of $35.63 and then once it clears more resistance at $36.20 with high volume.
Traders should now look for long-biased trades in WBAI as long as it's trending above Monday's intraday low of $33.35 or above more near-term support levels at $32.82 to $32 and then once it sustains a move or close above those breakout levels with volume that hits near or above 376,644 shares. If that breakout hits soon, then WBAI will set up to re-test or possibly take out its next major overhead resistance levels at $38 to $38.50, or even $41.
NN Inc.
NN Inc. (NNBR) manufactures and sells metal bearing, plastic and rubber, and precision metal components for bearing, automotive and industrial parts manufacturers worldwide. This stock closed up 6% to $25.49 in Monday's trading session.
Monday's Volume: 339,000
Three-Month Average Volume: 125,840
Volume % Change: 168%
From a technical perspective, NNBR ripped sharply higher here right above some near-term support at $23.49 and back above its 50-day moving average of $24.62 with strong upside volume flows. This sharp spike higher on Monday is quickly pushing shares of NNBR within range of triggering a major breakout trade. That trade will hit if NNBR manages to take out Monday's intraday high of $25.69 to some more key overhead resistance levels at $26.30 to its 52-week high at $26.45 with high volume.
Traders should now look for long-biased trades in NNBR as long as it's trending above Monday's intraday low of $23.90 or above more near-term support at $23.49 and then once it sustains a move or close above those breakout levels with volume that hits near or above 125,840 shares. If that breakout triggers soon, then NNBR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $30 to $35.
American Vanguard
American Vanguard (AVD), through its subsidiaries, develops, manufactures and markets specialty chemical products primarily for agricultural, commercial and consumer uses in the U.S. and internationally. This stock closed up 8.5% at $12.89 in Monday's trading session.
Monday's Volume: 885,000
Three-Month Average Volume: 374,248
Volume % Change: 173%
From a technical perspective, AVD ripped sharply higher here off its 52-week low of $11.37 with strong upside volume flows. This stock has been downtrending badly for the last four months and change, with shares moving lower from its high of around $22 to its 52-week low of $11.37. During that move, shares of AVD have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of AVD are now starting to rebound off its 52-week low and it's quickly moving within range of triggering a big breakout trade. That trade will hit if AVD manages to take out Monday's intraday high of $13.07 to $13.60 and then once it clears its 50-day at $13.76 with high volume.
Traders should now look for long-biased trades in AVD as long as it's trending above $12 or above its 52-week low of $11.37 and then once it sustains a move or close above those breakout levels with volume that hits near or above 374,248 shares. If that breakout gets underway soon, then AVD will set up to re-test or possibly take out its next major overhead resistance levels at $14.58 to $15.36, or even $16 to $17.
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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