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3 Big-Volume Stocks to Trade for Breakouts - views
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.
>>QE5 Is Coming -- Here Is What It Means to Your Portfolio With that in mind, let's take a look at several stocks rising on unusual volume recently. MacroGenics
MacroGenics (MGNX), a clinical-stage biopharmaceutical company, focuses on discovering and developing monoclonal antibody-based therapeutics for the treatment of cancer and autoimmune diseases. This stock closed up 7.5% to $20.65 in Wednesday's trading session.
Wednesday's Volume: 634,000
Three-Month Average Volume: 231,645
Volume % Change: 145%
From a technical perspective, MGNX ripped sharply higher here right above its 52-week low of $18.35 with strong upside volume. This stock has been downtrending badly for the last month, with shares plunging lower from its high of $38.55 to that low of $18.35. During that move, shares of MGNX have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of MGNX have now started to bounce higher off oversold levels, since its current relative strength index reading is 31.
Traders should now look for long-biased trades in MGNX as long as it's trending above its 52-week low of $18.35 and then once it sustains a move or close above Wednesday's high of $21.24 to $22 with volume that hits near or above 231,645 shares. If that breakout gets underway soon, then MGNX will set up to re-test or possibly take out its next major overhead resistance levels at $24.50 to $28.
Air Methods (AIRM), together with its subsidiaries, provides air medical emergency transport services and systems in the U.S. This stock closed up 2.7% at $53.59 in Wednesday's trading session.
Wednesday's Volume: 638,000
Three-Month Average Volume: 363,385
Volume % Change: 148%
From a technical perspective, AIRM trended higher here right off some near-term support at $50 and back above its 50-day moving average of $52.87 with strong upside volume. This stock recently formed a double bottom chart pattern at $49.43 to $49.35. Since forming that bottom, shares of AIRM have started to spike higher back above its 50-day and it's now moving within range of triggering a near-term breakout trade. That trade will hit if AIRM manages to take out some near-term overhead resistance levels at $55.63 to $56.97 with high volume.
Traders should now look for long-biased trades in AIRM as long as it's trending above $50 or those double bottom support zones and then once it sustains a move or close above those breakout levels with volume that this near or above 363,385 shares. If that breakout materializes soon, then AIRM will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $59.07. Any high-volume move above that level will then give AIRM a chance to trend north of $60.
Medallion Financial (TAXI) is engaged in originating, acquiring and servicing loans that finance taxicab medallions and various types of commercial businesses. This stock closed up 8.1% at $14.23 in Wednesday's trading session.
Wednesday's Volume: 681,000
Three-Month Average Volume: 167,197
Volume % Change: 315%
From a technical perspective, TAXI gapped sharply higher here back above its 50-day moving average of $13.67 with heavy upside volume. This move is quickly pushing shares of TAXI within range of triggering a major breakout trade. That trade will hit if TAXI manages to take out its 200-day moving average of $14.29 and then once it clears more key resistance levels at $14.38 to $14.51 with high volume.
Traders should now look for long-biased trades in TAXI as long as it's trending above Wednesday's low of $13.52 and then once it sustains a move or close above those breakout levels with volume that hits near or above 167,197 shares. If that breakout starts soon, then TAXI will set up to re-test or possibly take out its next major overhead resistance levels at $15.50 to $16. Any high-volume move above $16 will then give TAXI a chance to re-fill some of its previous gap-down-day zone from last December that started near $17.50. 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.