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.
MEI Pharma
MEI Pharma (MEIP), a development-stage oncology company, focuses on the clinical development of therapeutics for the treatment of cancer. This stock closed up 3% at $10 in Wednesday's trading session.
Wednesday's Volume: 190,000
Three-Month Average Volume: 136,021
Volume % Change: 50%
From a technical perspective, MEIP spiked notably higher here with above-average volume. This stock recently pulled back from its high of $11.63 to its low of $9.15. That low corresponded with MEIP's 50-day moving average and since that pullback shares of MEIP have started to rebound a bit. That rebound is starting to push shares of MEIP within range of triggering a near-term breakout trade. That trade will hit if MEIP manages to take out some near-term overhead resistance levels at $10.53 to $10.75 with high volume.
Traders should now look for long-biased trades in MEIP as long as it's trending above $9.50 or above its 50-day moving average of $9.05 and then once it sustains a move or close above those breakout levels with volume that hits near or above 136,021 shares. If that breakout hits soon, then MEIP will set up to re-test or possibly take out its next major overhead resistance levels at $11.63 to its 52-week high of $12.45.
Netflix
Netflix (NFLX) provides Internet television network service that enables subscribers to stream TV shows and movies directly on TVs, computers and mobile devices in the U.S. and internationally. This stock closed up 0.39% to $372.28 in Wednesday's trading session.
Wednesday's Volume: 3.47 million
Three-Month Average Volume: 2.92 million
Volume % Change: 50%
From a technical perspective, NFLX bounced modestly higher here right above its recent low of $365.75 with above-average volume. This stock has been absolutely destroyed by the sellers over the last few weeks, with shares plunging sharply lower from its high of $458 to its low of $365.75. During that move, shares of NFLX have been consistently making lower highs and lower lows, which is bearish technical price action. That move has now pushed shares of NFLX into oversold territory, since its current relative strength index reading is 24. Oversold can always get more oversold, but it's also an area where a stock can rebound sharply higher from.
Traders should now look for long-biased trades in NFLX as long as it's trending above its recent low of $365.75 and then once it sustains a move or close above Wednesday's high of $377.45 to more resistance at $384.93 with volume that hits near or above 2.92 million shares. If we get that move soon, then NFLX could rebound higher towards $400 or even its 50-day moving average of $412.07.
Baxter International
Baxter International (BAX) develops, manufactures and markets products for people with hemophilia, immune disorders, infectious diseases, kidney diseases, trauma and other chronic and acute medical conditions. This stock closed up 2.4% at $70.08 in Wednesday's trading session.
Wednesday's Volume: 8.16 million
Three-Month Average Volume: 3.11 million
Volume % Change: 146%
From a technical perspective, BAX ripped higher here right above its 200-day moving average of $68.12 with heavy upside volume. This spike pushed shares of BAX into breakout territory, after the stock took out some near-term overhead resistance levels at $68.64 to $69.65. Shares of BAX also flirted with some more resistance at $70.24 before the stock closed just below that level at $70.08. Market players should now look for a continuation move higher in the short-term if BAX manages to take out Wednesday's high of $70.75 with strong volume.
Traders should now look for long-biased trades in BAX as long as it's trending above Wednesday's low of $68.39 or above its 50-day at $68.09 and then once it sustains a move or close above $70.75 with volume that's near or above 3.11 million shares. If we get that move soon, then BAX will set up to re-test or possibly take out its next major overhead resistance levels at $72 to $73.01, or even its 52-week high at $74.60. Any high-volume move above $74.60 will then give BAX a chance to tag $80.
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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