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.
Monro Muffler Brake
Monro Muffler Brake (MNRO) provides automotive undercar repair and tire services in the U.S. This stock closed up 0.9% at $55.48 in Wednesday's trading session.
Wednesday's Volume: 697,000
Three-Month Average Volume: 232,210
Volume % Change: 210%
From a technical perspective, MNRO spiked modestly higher here right above its 50-day moving average of $53.54 with above-average volume. This stock has been uptrending strong for the last four months, with shares moving higher from its low of $41.26 to its recent high of $58. During that uptrend, shares of MNRO have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of MNRO within range of triggering a major breakout trade. That trade will hit if MNRO manages to take out some near-term overhead resistance levels at $56.74 to $57.93 and then once it takes out its 52-week high at $58 with high volume.
Traders should now look for long-biased trades in MNRO as long as it's trending above its 50-day at $53.54 and then once it sustains a move or close above those breakout levels with volume that's near or above 232,210 shares. If that breakout hits soon, then MNRO will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $65 to $67.
BroadSoft
BroadSoft (BSFT) provides software and services that enable mobile, fixed-line and cable service providers to deliver hosted or cloud-based unified communications and other voice and multimedia services over Internet protocol based networks. This stock closed up 6.7% at $29.96 in Wednesday's trading session.
Wednesday's Volume: 806,000
Three-Month Average Volume: 487,524
Volume % Change: 135%
From a technical perspective, BSFT spiked sharply higher here back above its 200-day moving average of $29.68 and above some near-term overhead resistance at $29.44 with above-average volume. This spike pushed shares of BSFT into breakout territory above as the stock started to trade into its previous gap-down-day zone from last November that started just above $33. Market players should now look for a continuation move higher into that gap if BSFT can manage to take out Wednesday's high of $30.20 with high volume.
Traders should now look for long-biased trades in BSFT as long as it's trending above Wednesday's low of $28.05 or above $27 and then once it sustains a move or close above $30.20 with volume that's near or above 487,524 shares. If we get that move soon, then BSFT will set up to re-fill some more of its previous gap-down-day zone that started just above $33.
Packaging Corporation of America
Packaging Corporation of America (PKG) engages in the manufacture and sale of containerboard and corrugated packaging products for industrial and consumer markets in the U.S. This stock closed up 1.3% at $63.84 in Wednesday's trading session.
Wednesday's Volume: 1.17 million
Three-Month Average Volume: 761,123
Volume % Change: 75%
From a technical perspective, PKG spiked modestly higher here right off its 50-day moving average of $62.41 with above-average volume. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $51 to its recent high of $66.50. During that uptrend, shares of PKG have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of PKG within range of triggering a near-term breakout trade. That trade will hit if PKG manages to take out Wednesday's high of $64.91 to its 52-week high at $66.50 with high volume.
Traders should now look for long-biased trades in PKG as long as it's trending above its 50-day at $62.41 or above more near-term support at $61.64 and then once it sustains a move or close above those breakout levels with volume that's near or above 761,123 shares. If that breakout hits soon, then PKG will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $70 to $75.
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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