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WINDERMERE, Fla. (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.
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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.
With that in mind, let's take a look at several stocks rising on unusual volume today.
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Overstock.com (OSTK) is an online retailer offering closeout and discount brand and non-brand name merchandise, including bed-and-bath goods, home dcor, kitchenware, watches, jewelry, electronics and computers, apparel and designer accessories. This stock is trading up 4.8% at $15.45 in recent trading.
Today’s Volume: 144,000
Average Volume: 146,411
Volume % Change: 129%
This stock is trading higher in front of its earnings report which is scheduled for Jan. 24, 2013, before the market opens.
From a technical perspective, OSTK is ripping right above its 50-day moving average of $14.55 with decent volume. This move has started to push shares of OSTK into breakout territory, since the stock has moved above some near-term overhead resistance levels at $15.06 to $15.56. Shares of OSTK are now moving within range of triggering another major breakout trade. That trade will hit if OSTK takes out some more overhead resistance at $16 with high volume. At last check, OSTK has hit an intraday high of $16.15 and volume is close to surpassing its three-month average action of 146,411 shares. That $16.15 level is a new 52-week high for OSTK.
Traders should now look for long-biased trades in OSTK as long as it’s trending above $15.32 to $15.56, and then once it sustains a move or close above $16 to $16.15 with volume that hits near or above 146,411 shares. If that breakout triggers now or after earnings, then OSTK will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that breakout are $17 to $17.69. Any high-volume move above $17.69 could send OSTK towards $20 after earnings.
GlaxoSmithKline (GSK) is engaged in the creation and discovery, development, manufacture and marketing of pharmaceutical products including vaccines, over-the-counter medicines and health-related consumer products. This stock is trading up 1.5% at $44.64 in recent trading.
Today’s Volume: 3.25 million
Average Volume: 2.47 million
Volume % Change: 129%
From a technical perspective, GSK is gapping higher here back above its 200-day moving average of $44.43 with above-average volume. This move is quickly pushing GSK within range of triggering a near-term breakout trade. That trade will hit if GSK manages to take out some near-term overhead resistance levels at $44.54 to $45.02 with high volume. At last check, GSK has hit an intraday high of $44.85 and volume is well above its three-month average action of 2.47 million shares.
Traders should now look for long-biased trades in GSK as long as it’s trending above its 200-day at $44.43, and then once it sustains a move or close above those breakout levels with volume that hits near or above 2.47 million shares. If that breakout triggers soon, then GSK will set up to re-test or possibly take out its next major overhead resistance level at $46 to $47.05.
Krispy Kreme Doughnuts
Krispy Kreme Doughnuts (KKD) is a branded retailer and wholesaler of doughnuts, complementary beverages and treats and packaged sweets. The company's shops are operated under the trademark doughnuts such as Krispy Kreme and Original Glazed. This stock is trading up 4.8% at $12.67 in recent trading.
Today’s Volume: 1.78 million
Average Volume: 1.15 million
Volume % Change: 173%
From a technical perspective, KKD is gapping higher here and into breakout territory above some near-term overhead resistance at $11.98 with high volume. This stock has been uptrending strong for the last month, with shares spiking higher from its low of $9.05 to its intraday high of $12.80. During that move, shares of KKD have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed KKD into overbought territory, since its current relative strength index reading is 79.45. Overbought can always get more overbought, so traders should continue to look for more upside in KKD.
Traders should now look for long-biased trades in KKD as long as it’s trending above its breakout level of $11.98 with strong upside volume flows. I would consider any upside volume day that registers near or above its three-month average action of 1.15 million shares as bullish. If KKD can maintain that trend, then look for this stock to potentially hit $15 in the near future.
To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.
-- Written by Roberto Pedone in Winderemere, Fla.
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At the time of publication, author had no positions in stocks mentioned.
Roberto Pedone, based out of Windermere, Fla., 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.