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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.
Auxilium Pharmaceuticals (AUXL), a specialty biopharmaceutical company, together with its subsidiaries, focuses on developing and marketing pharmaceutical products in urology and sexual health worldwide. This stock closed up 5.4% at $25.19 in Wednesday's trading session.
Wednesday's Volume: 1.73 million
Three-Month Average Volume: 1 million
Volume % Change: 65%
From a technical perspective, AUXL spiked sharply higher here right above some near-term support at $22.86 with above-average volume. This move is quickly pushing shares of AUXL within range of triggering a big breakout trade. That trade will hit if AUXL manages to take out its 52-week high at $25.25 with high volume.
Traders should now look for long-biased trades in AUXL as long as it's trending above Wednesday's low of $23.52 or above more support at $22.86 and then once it sustains a move or close above its 52-week high at $25.25 with volume that's near or above 1 million shares. If that breakout hits soon, then AUXL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout its next major overhead resistance levels at $29.37 to $32.
Prothena (PRTA) owns a drug discovery business platform focused on identifying and translating targets into potential therapies for chronic degenerative and other related disease areas. This stock closed up 9.7% to $29.78 in Wednesday's trading session.
Wednesday's Volume: 1.45 million
Three-Month Average Volume: 176,823
Volume % Change: 740%
From a technical perspective, PRTA exploded higher here right off its 50-day moving average of $27.21 with monster upside volume. This move pushed shares of PRTA into breakout territory, since the stock took out some near-term overhead resistance levels at $28 to $29.20. Shares of PRTA are now quickly moving within range of triggering another big breakout trade. That trade will hit if PRTA manages to take out Wednesday's high of $30.10 to its all-time high at $30.55 with high volume.
Traders should now look for long-biased trades in PRTA as long as it's trending above Wednesday's low of $26.75 and then once it sustains a move or close above those breakout levels with volume that hits near or above 176,823 shares. If that breakout hits soon, then PRTA will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $35 to $40.
Questcor Pharmaceuticals (QCOR), a biopharmaceutical company, provides drugs for the treatment of multiple sclerosis, nephrotic syndrome and infantile spasms indications. This stock closed up 3% at $66.15 in Wednesday's trading session.
Wednesday's Volume: 2.95 million
Three-Month Average Volume: 2.16 million
Volume % Change: 50%
From a technical perspective, QCOR spiked notably higher here and broke out above some near-term overhead resistance at $65.40 with above-average volume. This stock has been uptrending strong for the last month, with shares moving higher from its low of $47.45 to its intraday high of $66.89. During that uptrend, shares of QCOR have been making mostly higher lows and higher highs, which is bullish technical price action.
Traders should now look for long-biased trades in QCOR as long as it's trending above some near-term support levels at $62 or at $60.81 and then once it sustains a move or close above Wednesday's high of $66.89 with volume that hits near or above 2.16 million shares. If we get that move soon, then QCOR will set up to re-test or possibly take out its next major overhead resistance levels at $69.79 to its 52-week high at $74.76. 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.