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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 Poised for Breakouts
With that in mind, let's take a look at several stocks rising on unusual volume today. DaVita HealthCare Partners
DaVita HealthCare Partners (DVA) operates kidney dialysis centers and provides related lab services mainly in dialysis centers and in contracted hospitals across the U.S. This stock closed up 6.7% at $62.17 in Monday's trading session.
Monday's Volume: 5.65 million
Three-Month Average Volume: 1.84 million
Volume % Change: 216%
From a technical perspective, DVA exploded higher here back above its 200-day moving average of $59.27 with heavy upside volume. This move also pushed shares of DVA into breakout territory, since the stock took out and closed above some near-term overhead resistance at $62.14. Market players should now look for a continuation move higher in the short-term if DVA can manage to take out Monday's high of $62.78 with high volume.
Traders should now look for long-biased trades in DVA as long as it's trending above $61 or $60 and then once it sustains a move or close above Monday's high of $62.78 with volume that hits near or above 1.84 million shares. If we get that move soon, then DVA will set up to re-test or possibly take out its next major overhead resistance levels at $65.50 to its 52-week high at $65.67. Any high-volume move above those levels will then give DVA a chance to tag $70. Intercept Pharmaceuticals
Intercept Pharmaceuticals (ICPT) is a development-stage biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat chronic liver disease utilizing its proprietary bile acid chemistry. This stock closed up 2.8% at $59.36 in Monday's trading session.
Monday's Volume: 311,000
Three-Month Average Volume: 166,814
Volume % Change: 155%
From a technical perspective, ICPT bounced modestly higher here right off its 50-day moving average of $56.66 with above-average volume. This stock has been uptrending strong for the last month, with shares moving higher from its low of $46.81 to its intraday high of $60.43. During that uptrend, shares of ICPT have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ICPT within range of triggering a major breakout trade. That trade will hit if ICPT manages to take out Monday's high of $60.43, and then once it clears some past overhead resistance levels at $61.01 to $62.15 with high volume.
Traders should now look for long-biased trades in ICPT as long as it's trending above its 50-day at $56.66 or above $55 and then once it sustains a move or close above those breakout levels with volume that's near or above 166,814 shares. If that breakout hits soon, then ICPT will set up to re-test or possibly take out its next major overhead resistance level at $70. 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.