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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.
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With that in mind, let's take a look at several stocks rising on unusual volume recently. Palo Alto Networks (PANW) offers a network security platform in the Americas, Europe, the Middle East, Africa, the Asia Pacific and Japan. This stock closed up 11% at $77.12 in Friday's trading session.
Friday's Volume: 7.56 million
Three-Month Average Volume: 1.62 million
Volume % Change: 589%
>>5 Stocks Under $10 Set to Soar From a technical perspective, PANW exploded higher here with heavy upside volume. This move is quickly pushing shares of PANW within range of triggering a near-term breakout trade. That trade will hit if PANW manages to take out Friday's high of $78.59 and then once it clears its all-time high at $79.99 with high volume.
Traders should now look for long-biased trades in PANW as long as it's trending above $74 or $72.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.62 million shares. If that breakout starts soon, then PANW will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $90 to $100. Tandem Diabetes Care (TNMD), a medical device company, focuses on the design, development and commercialization of various products for people with insulin-dependent diabetes. This stock closed up 4.3% to $25.83 in Friday's trading session.
Friday's Volume: 370,000
Three-Month Average Volume: 146,526
Volume % Change: 241%
>>5 Stock Charts to Buy for Gains in March From a technical perspective, TNDM spiked notably higher here back above its 50-day moving average of $25.72 with above-average volume. This move is quickly pushing shares of TNDM within range of triggering a big breakout trade. That trade will hit if TNDM manages to take out Friday's high of $25.88 and then once it clears some more near-term overhead resistance levels at $26.90 to $27.53 with high volume.
Traders should now look for long-biased trades in TNDM as long as it's trending above some near-term support levels at $24 or at $23.75 and then once it sustains a move or close above those breakout levels with volume that hits near or above 146,526 shares. If that breakout materializes soon, then TNDM will set up to re-test or possibly take out its all-time high of $30.25. 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.