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.
>>5 Rocket Stocks Worth Buying Now
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.
>>5 Stocks Set to Soar on Bullish Earnings
With that in mind, let's take a look at several stocks rising on unusual volume recently.
HollySys Automation Technologies
HollySys Automation Technologies (HOLI) provides automation and control technologies and products to customers in industrial, railway, subway, nuclear power, building retrofit and mechanical and electronic industries primarily in the People's Republic China, Hong Kong, Southeast Asia and the Middle East. This stock closed up 5.4% at $21.54 in Monday's trading session.
Monday's Volume: 742,000
Three-Month Average Volume: 404,003
Volume % Change: 81%
From a technical perspective, HOLI ripped sharply higher here and broke out above some key near-term overhead resistance levels at $20.50 to its 52-week high at $21.34 with strong upside volume. This breakout pushed shares of HOLI above the upper-end of its recent sideways trading chart pattern, which is bullish price action. Market players should now look for a continuation move higher in the short-term if HOLI manages to take out Monday's high and its new 52-week high of $21.66 with high volume.
Traders should now look for long-biased trades in HOLI as long as it's trending above Monday's low of $20.60 or above $19.50 and then once it sustains a move or close above $21.66 with volume that this near or above 404,003 shares. If that move materializes soon, then HOLI will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $25 to $30.
Cigna
Cigna (CI), a health services organization, provides insurance and related products and services in the U.S. and internationally. This stock closed up 5.4% at $83.73 in Monday's trading session.
Monday's Volume: 5.91 million
Three-Month Average Volume: 2.11 million
Volume % Change: 223%
From a technical perspective, CI spiked sharply higher here right off its 200-day moving average of $80.11 and back above its 50-day moving average of $81.02 with strong upside volume. This stock recently formed a double bottom chart pattern at $76.41 to $76.79. Since forming that bottom, shares of CI have ripped sharply higher and it's now quickly moving within range of triggering a near-term breakout trade. That trade will hit if CI manages to take out Monday's high of $84.28 to some more near-term overhead resistance at $84.37 with high volume.
Traders should now look for long-biased trades in CI as long as it's trending above its 50-day at $81.02 and then once it sustains a move or close above those breakout levels with volume that's near or above 2.11 million shares. If that breakout triggers soon, then CI will set up to re-test or possibly take out its next major overhead resistance levels at $88 to its 52-week high at $90.63.
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.
RELATED LINKS:
>>3 Big Stocks Getting Big Attention
>>5 Toxic Stocks That Could Sink Your Portfolio
>>5 Big Trades to Brace for a Correction
Follow Stockpickr on Twitter and become a fan on Facebook.
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.
No comments:
Post a Comment