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.
Tower International (TOWR) manufactures and sells engineered structural metal components and assemblies for the automotive original equipment manufacturers in the Americas and Internationally. This stock closed up 3.6% to $27.81 in Wednesday's trading session.
Wednesday's Volume: 351,000
Three-Month Average Volume: 191,174
Volume % Change: 98%
From a technical perspective, TOWR spiked sharply higher here right off its 50-day moving average of $26.76 with above-average volume. This move is quickly pushing shares of TOWR within range of triggering a near-term breakout trade. That trade will hit if TOWR manages to take out Wednesday's high of $27.83 to some more near-term resistance at $28.06 with high volume.
Traders should now look for long-biased trades in TOWR as long as it's trending above its 50-day at $26.76 or above more near-term support at $26.16 and then once it sustains a move or close above those breakout levels with volume that hits near or above 191,174 shares. If that breakout triggers soon, then TOWR will set up to re-test or possibly take out its next major overhead resistance levels at $29.07 to its 52-week high at $30.28. Any high-volume move above those levels will then give TOWR a chance to tag $35.
GW Pharmaceuticals (GWPH), a biopharmaceutical company, together with its subsidiaries, is engaged in discovering, developing and commercializing cannabinoid prescription medicines. This stock closed up 7.8% to $73.10 in Wednesday's trading session.
Wednesday's Volume: 1.95 million
Three-Month Average Volume: 734,826
Volume % Change: 165%
From a technical perspective, GWPH ripped sharply higher here with strong upside volume. This stock recently pulled back to its 50-day moving average and subsequently has started to bounce sharply higher. This spike higher on Wednesday is quickly pushing shares of GWPH within range of triggering a near-term breakout trade. That trade will hit if GWPH manages to take out Wednesday's high of $73.57 to some more near-term overhead resistance at $74.69 with high volume.
Traders should now look for long-biased trades in GWPH as long as it's trending above $70 or above Wednesday's low of $67.40 and then once it sustains a move or close above those breakout levels with volume that hits near or above 734,826 shares. If that breakout starts soon, then GWPH will set up to re-test or possibly take out its all-time high at $86.45.
Broadwind Energy (BWEN) provides products and services to the energy, mining, and infrastructure sector customers primarily in the U.S. This stock closed up 11.9% at $13.49 in Wednesday's trading session.
Wednesday's Volume: 475,000
Three-Month Average Volume: 197,510
Volume % Change: 210%
From a technical perspective, BWEN exploded higher here right off some near-term support at $11.60 with strong upside volume. This move pushed shares of BWEN into breakout territory, since the stock took out some near-term overhead resistance levels at $12.50 to $13.19. Shares of BWEN are now starting to move within range of triggering another big breakout trade. That trade will hit if BWEN manages to clear Wednesday's high of $13.59 to its 52-week high at $14 with high volume.
Traders should now look for long-biased trades in BWEN as long as it's trending above $12.50 or $12 and then once it sustains a move or close above those breakout levels with volume that hits near or above 197,510 shares. If that breakout kicks off soon, then BWEN will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $17 to $20.
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.