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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.
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 Hated Earnings Stocks You Should Love With that in mind, let's take a look at several stocks rising on unusual volume recently. AOL
AOL (AOL) offers a suite of online content, products and services to consumers, advertisers, publishers and subscribers worldwide. This stock closed up 1.7% to $46.87 in Monday's trading session.
Monday's Volume: 3.69 million
Three-Month Average Volume: 1.42 million
Volume % Change: 148%
>>5 Stocks Ready to Break Out From a technical perspective, AOL spiked notably higher here right off its 50-day moving average of $45.73 with above-average volume. This stock has been downtrending over the last few weeks, with shares moving lower from its high of $53.28 to its recent low of $45.52. During that move, shares of AOL have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of AOL might be setting up to reverse that downtrend and enter a new uptrend.
Traders should now look for long-biased trades in AOL as long as it's trending above that recent low of $45.52 and then once it sustains a move or close above Monday's high of $49.91 with volume that's near or above 1.42 million shares. If we get that move soon, then AOL will set up to re-test or possibly take out its 52-week high at $53.28. Any high-volume move above that level will then give AOL a chance to tag $55 to $60.
Apple (AAPL) designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players worldwide. This stock closed up 0.19% to $501.53 in Monday's trading session.
Monday's Volume: 14.30 million
Three-Month Average Volume: 12.12 million
Volume % Change: 50%
>>Wall Street Got Apple Wrong -- Again From a technical perspective, AAPL trended modestly higher here with above-average volume. This stock recently gapped down sharply from over $550 to under $510 with heavy downside volume. Following that move, shares of AAPL have started to rebound off its recent low of $493.55. That rebound is quickly pushing shares of AAPL within range of triggering a near-term breakout trade. That trade will hit if AAPL manages to take out Monday's high of $507.73 to its gap-down-day high of $515 with high volume.
Traders should now look for long-biased trades in AAPL as long as it's trending above Monday's low of $500.60 or above some more near-term support at $493.55 and then once it sustains a move or close above those breakout levels with volume that hits near or above 12.12 million shares. If that breakout hits soon, then AAPL will set up to re-fill some of its previous gap-down-day zone that started just above $550. 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.