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.
Dick's Sporting Goods
Dick's Sporting Goods (DKS) operates as a sports and fitness retailer primarily in the Eastern U.S. This stock closed up 0.92% at $57.19 in Wednesday's trading session.
Wednesday's Volume: 4.10 million
Three-Month Average Volume: 1.59 million
Volume % Change: 189%
From a technical perspective, DKS jumped modestly higher here with above-average volume. This stock has been uptrending for the last month, with shares moving higher from its low of $50.54 to its intraday high of $57.25. During that uptrend, shares of DKS have been making mostly higher lows and higher highs, which is bullish technical price action. Market players should now look for a continuation move higher in the short-term if DKS manages to take out Wednesday's high of $57.25 with strong volume.
Traders should now look for long-biased trades in DKS as long as it's trending above $56 or $54 and then once it sustains a move or close above $57.25 with volume that hits near or above 1.59 million shares. If that move starts soon, then DKS will set up to re-test or possibly take out its 52-week high at $58.73. Any high-volume move above that level will then give DKS a chance to trend north of $60.
Ubiquiti Networks
Ubiquiti Networks (UBNT), together with its subsidiaries, offers a portfolio of networking products and solutions for service providers and enterprises. This stock closed up 6.6% at $52.46 in Wednesday's trading session.
Wednesday's Volume: 1.90 million
Three-Month Average Volume: 1.19 million
Volume % Change: 64%
From a technical perspective, UBNT soared sharply higher here right above some near-term support at $48 with above-average volume. This move pushed shares of UBNT into breakout territory, since the stock took out and closed above some near-term overhead resistance at $51.60. This spike on Wednesday is now quickly pushing shares of UBNT within range of triggering an even bigger breakout trade. That trade will hit if UBNT manages to take out Wednesday's high of $53.02 to its all-time high at $53.58 with high volume.
Traders should now look for long-biased trades in UBNT as long as it's trending above Wednesday's low of $48.60 or above $48 and then once it sustains a move or close above those breakout levels with volume that's near or above 1.19 million shares. If that breakout kicks off soon, then UBNT will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $60 to $65.
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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