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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 Stocks Under $10 Set to Soar With that in mind, let's take a look at several stocks rising on unusual volume recently. Diamondback Energy
Diamondback Energy (FANG), an independent oil and natural gas company, focuses on the acquisition, development, exploration and exploitation of onshore oil and natural gas reserves in the Permian Basin in West Texas. This stock closed up 2.4% to $69.70 in Friday's trading session.
Friday's Volume: 1.46 million
Three-Month Average Volume: 898,736
Volume % Change: 83%
From a technical perspective, FANG jumped notably higher here with above-average volume. This move pushed shares of FANG into breakout and new all-time-high territory, after the stock took out some near-term overhead resistance at $68. Market players should now look for a continuation move to the upside in the near-term if FANG can manage to take out Friday's high of $69.90 with high volume.
Traders should now look for long-biased trades in FANG as long as it's trending above $67.50 or above more near-term support at $65 and then once it sustains a move or close above Friday's high of $69.90 with volume that hits near or above 898,736shares. If that move kicks off soon, then FANG will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that action are $75 to $80.
Quad/Graphics (QUAD), together with its subsidiaries, provides print and related products and services in the U.S., Europe and Latin America. This stock closed up 3.4% at $23.14 in Friday's trading session.
Friday's Volume: 522,000
Three-Month Average Volume: 210,252
Volume % Change: 185%
From a technical perspective, QUAD spiked notably higher here with above-average volume. This move higher on Friday is starting to push shares of QUAD within range of triggering a near-term breakout trade. That trade will hit if QUAD manages to take out Friday's high of $23.25 to some more near-term overhead resistance at $23.43 with high volume.
Traders should now look for long-biased trades in QUAD as long as it's trending above some near-term support levels at $22.36 or at $21.39 and then once it sustains a move or close above those breakout levels with volume that hits near or above 210,252 shares. If that breakout materializes soon, then QUAD will set up to re-test or possibly take out its next major overhead resistance levels at $25 to $26.50, or even $27.31. 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.