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.
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 10.7% to $33.87 in Friday's trading session.
Friday's Volume: 8.27 million
Three-Month Average Volume: 2.74 million
Volume % Change: 450%
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From a technical perspective, ITMN exploded to the upside here right off some support at $30 and broke out above some near-term overhead resistance at $32.53 with monster upside volume. This move is quickly pushing shares of ITMN within range of triggering another big breakout trade. That trade will hit if ITMN manages to take out Friday's high of $35.58 to its 52-week high at $38.73 with high volume.
Traders should now look for long-biased trades in ITMN as long as it's trending above Friday's low of $29.97 and then once it sustains a move or close above those breakout levels with volume that hits near or above 2.74 million shares. If that breakout gets underway soon, then ITMN will set up to enter new 52-week-high territory above $38.73, which is bullish technical price action. Some possible upside targets off that move are $45 to $50.
Emergent BioSolutions (EBS), a specialty pharmaceutical company, engages in the development, manufacture and commercialization of specialized products for use in defense and commercial markets in the U.S. and internationally. This stock closed up 10.6% at $27.77 in Friday's trading session.
Friday's Volume: 1.09 million
Three-Month Average Volume: 316,730
Volume % Change: 388%
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From a technical perspective, EBS gapped up sharply higher here and broke out above some near-term overhead resistance levels at $26 to $26.71 with heavy upside volume. This move also pushed shares of EBS into new 52-week-high territory, which is bullish technical price action. Market players should now look for a continuation move higher in the short-term if EBS manages to take out Friday's high of $27.96 with strong volume.
Traders should now look for long-biased trades in EBS as long as it's trending above Friday's low of $27.96 and then once it sustains a move or close above $27.96 with volume that's near or above 316,730 shares. If we get that move soon, then EBS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $35 to $40.
Aegerion Pharmaceuticals (AEGR), a biopharmaceutical company, engages in the development and commercialization of novel therapeutics to treat debilitating and fatal rare diseases in the U.S. This stock closed up 10.6% at $55.53 in Friday's trading session.
Friday's Volume: 3.74 million
Three-Month Average Volume: 846,051
Volume % Change: 348%
From a technical perspective, AEGR exploded sharply higher here with heavy upside volume. This stock has been downtrending badly for the last few weeks, with shares moving lower from its high of $68.76 to its intraday low of $47.11. During that downtrend, shares of AEGR have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of AEGR could be setting up to reverse its downtrend and enter new uptrend, since the stock is coming off its low with big volume.
Traders should now look for long-biased trades in AEGR as long as it's trending above $52 or $50 and then once it sustains a move or close above Friday's high of $58.08 with volume that's near or above 846,051 shares. If that move starts soon, then AEGR will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $62.83 to $65. Any high-volume move above those levels will then give AEGR a chance to tag $68 to $70.
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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