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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.
>>5 Stocks Poised for Breakouts With that in mind, let's take a look at several stocks rising on unusual volume recently.
Harley-Davidson (HOG) manufactures cruiser and touring motorcycles. This stock closed up 1.1% to $72.50 in Monday's trading session.
Monday's Volume: 2.52 million
Three-Month Average Volume: 1.43 million
Volume % Change: 89%
From a technical perspective, HOG trended modestly higher here right above some near-term support levels at $71 to $70.28 with above-average volume. This move is starting to push shares of HOG within range of triggering a big breakout trade. That trade will hit if HOG manages to take out Monday's high of $72.62 to its 52-week high at $73.50 with high volume.
Traders should now look for long-biased trades in HOG as long as it's trending above support at $71 or at $70.28 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.43 million shares. If that breakout hits soon, then HOG will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $80 to $85.
Hanesbrands (HBI), a consumer goods company, designs, manufactures, sources and sells various basic apparels primarily in the U.S. This stock closed up 1.4% at $80.08 in Monday's trading session.
Monday's Volume: 1.37 million
Three-Month Average Volume: 857,206
Volume % Change: 78%
From a technical perspective, HBI bounced modestly higher here right off $78 with above-average volume. This stock recently gapped up sharply higher from its low of $74.11 to its high of $81.83 with heavy upside volume. Shares of HBI briefly pulled back to $78 on Monday and now the stock is quickly moving within range of triggering a big breakout trade. That trade will hit if HBI manages to take out Monday's high of $80.17 to its 52-week high at $81.83 with high volume.
Traders should now look for long-biased trades in HBI as long as it's trending above $78 or above $77 and then once it sustains a move or close above those breakout levels with volume that this near or above 857,206 shares. If that breakout materializes soon, then HBI will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $90 to $95. Rent-A-Center
Rent-A-Center (RCII), together with its subsidiaries, leases household durable goods to customers on a rent-to-own basis. This stock closed up 5.7% to $29.95 in Monday's trading session.
Monday's Volume: 2.52 million
Three-Month Average Volume: 991,633
Volume % Change: 231%
From a technical perspective, RCII ripped sharply higher here right above some near-term support at $28 with strong upside volume. This move briefly pushed shares of RCII into breakout territory, after the stock flirted with some near-term overhead resistance at $29.95. Shares of RCII hit an intraday high of $30.39 before it closed right at $29.95. Market players should now look for a continuation move higher in the short-term if RCII manages to take out Monday's high of $30.39 with strong volume.
Traders should now look for long-biased trades in RCII as long as it's trending above Monday's low of $28.55 or above $28 and then once it sustains a move or close above $30.39 with volume that hits near or above 991,633 shares. If we get that move soon, then RCII will set up to re-test or possibly take out its next major overhead resistance levels at $33 to $34, or even $36 to $37. 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.