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.
Mattress Firm
Mattress Firm (MFRM), through its subsidiaries, operates as a specialty retailer of mattresses and related products and accessories in the U.S. This stock closed up 1.6% at $44.86 in Friday's trading session.
Friday's Volume: 472,000
Three-Month Average Volume: 210,052
Volume % Change: 146%
From a technical perspective, MFRM spiked notably higher here with above-average volume. This move briefly pushed shares of MFRM back above its 50-day moving average of $46 and briefly into breakout territory above $46.63. Shares of MFRM tagged an intraday high of $47.79 before it closed the trading session at $44.86. Market players should now look for a continuation move higher in the short-term if MFRM manages to take out Friday's high of $47.79 with high volume.
Traders should now look for long-biased trades in MFRM as long as it's trending above Friday's low of $43.98 or above more near-term support at $43.20 and then once it sustains a move or close above $47.79 with volume that's near or above 210,052 shares. If that move gets underway soon, then MFRM will set up to re-test or possibly take out its next major overhead resistance levels at $49.54 to its all-time high at $49.81. Any high-volume move above $49.81 will then push shares of MFRM into new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $55 to $60.
GATX
GATX (GMT) leases, operates, manages and remarkets assets in the rail and marine markets in North America and internationally. This stock closed up 0.8% at $65.85 in Friday's trading session.
Friday's Volume: 715,072
Three-Month Average Volume: 306,923
Volume % Change: 118%
From a technical perspective, GMT trended modestly higher here back above its 50-day moving average of $65.78 with above-average volume. This stock recently formed a double bottom chart pattern at $62.78 to $62.48. Following that bottom, shares of GMT have now started to spike higher and move within range of triggering a near-term breakout trade. That trade will hit if GMT manages to take out some key near-term overhead resistance levels at $66.33 to $67.25 with high volume.
Traders should now look for long-biased trades in GMT as long as it's trending above Friday's low of $65.03 or above more support at $64 and then once it sustains a move or close above those breakout levels with volume that's near or above 306,923 shares. If that breakout triggers soon, then GMT will set up to re-test or possibly take out its next major overhead resistance levels $69 to its 52-week high at $69.87. Any high-volume move above $69.87 will then push shares of GMT into new 52-week-high territory, which is bullish technical price action.
Palo Alto Networks
Palo Alto Networks (PANW) offers a network security platform in the Americas, Europe, the Middle East, Africa, the Asia Pacific and Japan. This stock closed up 2.3% at $74.91 in Friday's trading session.
Friday's Volume: 3.46 million
Three-Month Average Volume: 2.05 million
Volume % Change: 74%
From a technical perspective, PANW rose notably higher here right above some near-term support at $72.50 with above-average volume. This spike higher on Friday is starting to push shares of PANW within range of triggering a major breakout trade. That trade will hit if PANW manages to take out some key near-term overhead resistance levels at $78 to its 52-week high at $80.84 with high volume.
Traders should now look for long-biased trades in PANW as long as it's trending above support at $72.50 and then once it sustains a move or close above those breakout levels with volume that's near or above 2.05 million shares. If that breakout starts soon, then PANW will set up to enter new 52-week-high territory above $80.84, which is bullish technical price action. Some possible upside targets off that breakout are $85 to $90.
Valeant Pharmaceuticals
Valeant Pharmaceuticals (VRX) develops, manufactures and markets pharmaceuticals, over-the-counter products and medical devices in the areas of eye health, dermatology and neurology therapeutic classes worldwide. This stock closed up 1.5% at $131.21 in Friday's trading session.
Friday's Volume: 11.60 million
Three-Month Average Volume: 3.16 million
Volume % Change: 346%
From a technical perspective, VRX spiked higher here back above its 50-day moving average of $129.59 with heavy upside volume. This move briefly pushed shares of VRX into breakout territory, since the stock flirted with some near-term overhead resistance at $134.37. Shares of VRX closed below that breakout level and below its intraday high of $136.38 to finish the trading session at $131.21. Market players should now look for a continuation move higher in the short-term if VRX manages to take out Friday's intraday high of $136.38 to some more key overhead resistance at $139 with high volume.
Traders should now look for long-biased trades in VRX as long as it's trending above its 50-day at $129.59 or above Friday's low of $125.61 and then once it sustains a move or close above $136.38 to $139 with volume that's near or above 3.16 million shares. If that move gets underway soon, then VRX will set up to re-test or possibly take out its next major overhead resistance levels at $147 to its 52-week high of $153.10.
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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