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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.
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.
With that in mind, let's take a look at several stocks rising on unusual volume recently.
Realogy Holdings (RLGY), a provider of residential real estate services in the U.S., closed up 1.4% at $49.99 on Wednesday.
Wednesday's Volume: 19.31 million
Average Volume: 2.08 million
Volume % Change: 858%
Shares of RLGY moved higher on Wednesday after the company said its second-quarter earnings will beat expectations as the real estate market recovers. The firm also said that Apollo Global Management is selling its remaining 25.1 million-share stake in the company, currently valued at around $1.24 billion.
From a technical perspective, RLGY trended modestly higher here right above its 50-day moving average of $50.23 with monster upside volume. This move is quickly pushing shares of RLGY within range of triggering a near-term breakout trade. That trade will hit if RLGY manages to take out some near-term overhead resistance levels at $51.80 to $51.90 with high volume.
Traders should now look for long-biased trades in RLGY as long as it's trending above its 50-day at $50.23 or above more support at $48 and then once it sustains a move or close above those breakout levels with volume that hits near or above 2.08 million shares. If that breakout triggers soon, then RLGY will set up to re-test or possibly take out its all-time high at $55.28. Any high-volume move above that level will then give RLGY a chance to trend north of $60.
Bank of Nova Scotia
Bank of Nova Scotia (BNS) is a diversified financial institution. This stock closed up 1.1% at $55.73 on Wednesday.
Wednesday's Volume: 1.12 million
Average Volume: 591,314
Volume % Change: 115%
From a technical perspective, BNS trended up modestly here and back above both its 50-day and 200-day moving averages with high volume. This stock recently formed a double bottom chart pattern at $51.65 to $52.05. Following that bottom, shares of BNS have uptrended with the stock consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BNS within range of triggering a near-term breakout trade. That trade will hit if BNS manages to take out some near-term overhead resistance levels at $55.94 to $57 with high volume.
Traders should now look for long-biased trades in BNS as long as it's trending above some key near-term support at $55 and then once it sustains a move or close above those breakout levels with volume that's near or above 591,314 shares. If we get that breakout soon then BNS will set up to re-test or possibly take out its next major overhead resistance levels at $57.76 to $58.95. Any high-volume move above those levels will then give BNS a chance to take out its 52-week high at $60.23.
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.
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.