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.
VeriFone Systems (PAY) designs, markets and services electronic payment solutions at the point of sale worldwide. This stock closed up 8.7% to $34.94 in Monday's trading session.
Monday's Volume: 4.60 million
Three-Month Average Volume: 1.57 million
Volume % Change: 162%
From a technical perspective, PAY gapped up sharply higher here back above its 50-day moving average of $32.51 with strong upside volume flows. This move pushed shares of PAY into breakout territory, since the stock took out some near-term overhead resistance levels at $34.58 to $34.78. Shares of PAY are now quickly moving within range of triggering an even bigger breakout trade. That trade will hit if PAY manages to take out its 52-week high of $35.11 to some past resistance at $36.13 with high volume.
Traders should now look for long-biased trades in PAY as long as it's trending above Monday's low of $33.34 or above its 50-day at $32.61 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.57 million shares. If that breakout triggers soon, then PAY will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45.
Monotype Imaging (TYPE) develops, markets and licenses technologies and fonts in the U.S., the U.K., Germany, Japan and rest of Asia. This stock closed up 4.1% at $26.66 in Monday's trading session.
Monday's Volume: 472,000
Three-Month Average Volume: 159,530
Volume % Change: 179%
From a technical perspective, TYPE ripped higher here with above-average volume. This stock has been downtrending over the last month and change, with shares moving lower from its high of $31.41 to its recent low of $23.52. During that move, shares of TYPE have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of TYPE have now started to bounce off those recent lows and it's entered breakout territory above some near-term overhead resistance at $25.92. Market players should now look for a continuation move higher in the short-term if TYPE manages to take out Monday's intraday high of $26.93 with strong volume.
Traders should now look for long-biased trades in TYPE as long as it's trending above Monday's low of $25.06 or above more near-term support at $24.53 and then once it sustains a move or close above $26.93 with volume that's near or above 159,530 shares. If that move gets underway soon, then TYPE will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day of $28.38 to its 50-dayat $28.85. Any high-volume move above those levels will then give TYPE a chance to tag $30 to $31.50.
AMC Networks (AMCX) owns and operates various cable television brands delivering content to audiences, and a platform to distributors and advertisers in the U.S. and internationally. This stock closed up 1.1% at $58.68 in Monday's trading session.
Monday's Volume: 2.22 million
Three-Month Average Volume: 909,736
Volume % Change: 147%
From a technical perspective, AMCX trended modestly higher here right above its recent 52-week low of $53.99 with above-average volume. This stock has been downtrending badly for the last two months and change, with shares moving lower from its high of $78.39 to its recent low of $53.99. During that downtrend, shares of AMCX have been consistently making lower highs and lower lows, which is bearish technical price action. Shares of AMCX also gapped down recently from just above $66 to $53.99 with heavy downside volume. That said, shares of AMCX have now started to spike off its 52-week low with volume and it's quickly moving within range of triggering a near-term breakout trade. That trade will hit if AMCX manages to take out some near-term overhead resistance levels at $60.46 to its gap-down-day high of $60.90 with high volume.
Traders should now look for long-biased trades in AMCX as long as it's trending above Monday's low of $56.63 or above its 52-week low of $53.99 and then once it sustains a move or close above those breakout levels with volume that's near or above 909,736 shares. If that breakout materializes soon, then AMCX will set up to re-fill some of its previous gap-down-day zone that started just above $66.
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 includingCNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.