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.
Control4
Control4 (CTRL) provides automation and control solutions for the connected home. This stock closed up 6.5% to $19.26 in Monday's trading session.
Monday's Volume: 930,000
Three-Month Average Volume: 313,839
Volume % Change: 202%
From a technical perspective, CTRL ripped sharply higher here back above its 200-day moving average of $18.90 with strong upside volume. This spike higher on Monday is quickly pushing shares of CTRL within range of triggering a near-term breakout trade. That trade will hit if CTRL manages to take out some key near-term overhead resistance levels at $19.35 to $20.04 with high volume.
Traders should now look for long-biased trades in CTRL as long as it's trending above Monday's intraday low of $18.18 or above its 50-day at $17.62 and then once it sustains a move or close above those breakout levels with volume that hits near or above 313,839 shares. If that breakout triggers soon, then CTRL will set up to re-test or possibly take out its next major overhead resistance levels at $21 to $22, or even $23 to $24.
3D Systems
3D Systems (DDD), through its subsidiaries, operates as a provider of 3D printing centric design-to-manufacturing solutions in the U.S., Germany, the Asia-Pacific and other European countries. This stock closed up 7.2% to $57.23 in Monday's trading session.
Monday's Volume: 7.10 million
Three-Month Average Volume: 4.45 million
Volume % Change: 175%
From a technical perspective, DDD ripped sharply higher here and broke out above some near-term overhead resistance at $56.95 with above-average volume. Market players should now look for a continuation move to the upside in the short-term if DDD manages to take out Monday's intraday high of $57.23 with strong upside volume.
Traders should now look for long-biased trades in DDD as long as it's trending above some past resistance at $55 and then once it sustains a move or close above $57.23 with volume that hits near or above 4.45 million shares. If that move begins soon, then DDD will set up to re-test or possibly take out its next major overhead resistance levels at $60 to $61, or even its 200-day moving average of $64.42.
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Cognex
Cognex (CGNX) provides machine vision products that capture and analyze visual information in order to automate tasks primarily in manufacturing processes. This stock closed up 2.5% at $39.02 in Monday's trading session.
Monday's Volume: 694,000
Three-Month Average Volume: 468,642
Volume % Change: 50%
From a technical perspective, CGNX trended notably higher here with above-average volume. This stock has been uptrending for the last two months, with shares moving higher from its low of $30.67 to its intraday high of $39.16. During that uptrend, shares of CGNX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CGNX within range of triggering a major breakout trade. That trade will hit if CGNX manages to take out Monday's intraday high of $39.16 to its 52-week high of $40.14 with high volume.
Traders should now look for long-biased trades in CGNX as long as it's trending above Monday's low of $38.26 or above $37 and then once it sustains a move or close above those breakout levels with volume that's near or above 468,642 shares. If that breakout gets set off soon, then CGNX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $45 to $50.
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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