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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.
PTC Therapeutics (PTCT) is a biopharmaceutical company focused on the discovery and development of orally administered, small-molecule drugs that target post-transcriptional control processes. This stock closed up 12.6% at $24.64 in Wednesday's trading session.
Wednesday's Volume: 437,000
Three-Month Average Volume: 125,384
Volume % Change: 240%
>>5 Rocket Stocks to Stomp the S&P in 2014 From a technical perspective, PTCT exploded higher here and broke out into new all-time-high territory with heavy upside volume flows. This stock has been uptrending strong over the last two months, with shares soaring higher from its low of $13.15 to its intraday high of $24.99. During that uptrend, shares of PTCT have been making mostly higher lows and higher highs, which is bullish technical price action. Market players should now look for a continuation move higher in the short-term if shares of PTCT can manage to take out Wednesday's high of $24.99 with strong upside volume.
Traders should now look for long-biased trades in PTCT as long as it's trending above Wednesday's low of $21.77 and then once it sustains a move or close above $24.99 with volume that's near or above 125,384 shares. If we get that move soon, then PTCT will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $28 to $30. Bluebird Bio
Bluebird Bio (BLUE), a clinical-stage biotechnology company, focuses on the development, manufacture and marketing of therapies to treat various human diseases. This stock closed up 2.2% to $22.55 in Wednesday's trading session.
Wednesday's Volume: 607,000
Three-Month Average Volume: 163,081
Volume % Change: 239%
>>4 Stocks Under $10 Making Big Moves From a technical perspective, BLUE spiked modestly higher here right above some near-term support at $21.52 and above its 50-day moving average at $20.56 with above-average volume. This move is starting to push shares of BLUE within range of triggering a near-term breakout trade. That trade will hit if BLUE manages to take out Wednesday's high of $22.83 to some more near-term overhead resistance levels at $23.40 to $23.87 with high volume.
Traders should now look for long-biased trades in BLUE as long as it's trending above its 50-day moving average of $20.56 or above $20 and then once it sustains a move or close above those breakout levels with volume that hits near or above 163,081 shares. If that breakout hits soon, then BLUE will set up to re-test or possibly take out its next major overhead resistance levels at $26 to $29. 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.