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.
Perion Network
Perion Network (PERI), a digital media company, provides products and services to consumers focusing on second wave adopters. This stock closed up 2.9% at $10.45 in Thursday's trading session.
Thursday's Volume: 510,000
Three-Month Average Volume: 193,208
Volume % Change: 250%
From a technical perspective, PERI jumped higher here back above its 50-day moving average of $10.37 with strong upside volume flows. This stock has been trending sideways and consolidating for the last three months, with shares moving between $9.55 on the downside and $11.45 on the upside. Market players should now look for a continuation move to the upside in the short-term if PERI manages to take out Thursday's intraday high of $10.48 with strong volume.
Traders should now look for long-biased trades in PERI as long as it's trending above some key near-term support levels at $10 or at $9.79 and then once it sustains a move or close above $10.48 with volume that hits near or above 193,208 shares. If that move gets started soon, then PERI will set up to re-test or possibly take out its next major overhead resistance levels at $11.30 to $11.45. Any high-volume move above those levels will then give PERI a chance to tag $12 to $12.50.
Covance
Covance (CVD), a drug development services company, provides a range of early-stage and late-stage product development services to the pharmaceutical and biotechnology industries worldwide. This stock closed up 1.4% at $87.30 in Thursday's trading session.
Thursday's Volume: 752,000
Three-Month Average Volume: 570,854
Volume % Change: 138%
From a technical perspective, CVD trended modestly higher here right off its 50-day moving average of $85.76 with above-average volume. This move briefly pushed shares of CVD into breakout territory, since the stock flirted with some near-term overhead resistance at $87.83. Shares of CVD tagged an intraday high of $88.22, before closing just below that level at $87.30. Market players should now look for a continuation move to the upside in the short-term if CVD manages to take out Thursday's intraday high of $88.22 with high volume.
Traders should now look for long-biased trades in CVD as long as it's trending above its 50-day moving average at $85.76 and then once it sustains a move or close above $88.22 with volume that's near or above 570,854 shares. If that move gets started soon, then CVD will set up to re-test or possibly take out its next major overhead resistance levels at $90 to its 200-day moving average of $91.15, or $92 to $95.
Alliance Fiber Optic Products
Alliance Fiber Optic Products (AFOP) designs, manufactures and markets various fiber optic components and integrated modules for communications equipment manufacturers and service providers in North America, Europe and Asia. This stock closed up 7.5% at $19.96 in Thursday's trading session.
Thursday's Volume: 1.11 million
Three-Month Average Volume: 796,867
Volume % Change: 122%
From a technical perspective, AFOP gapped up sharply higher here back above its 50-day moving average of $19.59 with above-average volume. This gap to the upside is coming after shares of AFOP recently pulled back off its high of $22.13 to its low of $17.70. Market players should now look for a continuation move higher in the short term if AFOP manages to take out Thursday's intraday high of $20.44 to some near-term resistance at $21 with high volume.
Traders should now look for long-biased trades in AFOP as long as it's trending above Thursday's intraday low of $19.05 or above more key near-term support levels $18 to $17.70 and then once it sustains a move or close above $20.44 to $21 with volume that's near or above 796,867 shares. If that move kicks off soon, then AFOP will set up to re-test or possibly take out its next major overhead resistance levels $22.13 to $22.60. Any high-volume move above those levels will then give AFOP a chance to tag or take out its 52-week high at $23.94.
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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