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3 Unusual-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 Under $10 Set to Soar With that in mind, let's take a look at several stocks rising on unusual volume recently.
Envision Healthcare (EVHC) provides physician-led, outsourced medical services to consumers, hospitals, health care systems, health plans and government entities in the U.S. This stock closed up 3.8% at $34.90 in Friday's trading session.
Friday's Volume: 956,000
Three-Month Average Volume: 509,519
Volume % Change: 98%
From a technical perspective, EVHC jumped higher here right off its 50-day moving average of $33.42 with above-average volume. This spike higher on Friday is starting to push shares of EVHC within range of triggering a big breakout trade. That trade will hit if EVHC manages to take out some near-term overhead resistance levels at $35.47 to $35.70 and then once it clears its all-time high of $36.80 with high volume.
Traders should now look for long-biased trades in EVHC as long as it's trending above its 50-day at $33.42 or above more near-term support levels at $33 to $32 and then once it sustains a move or close above those breakout levels with volume that hits near or above 509,519 shares. If that breakout hits soon, then EVHC will set up to enter new all-time-high territory above $36.80, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45. Jack in the Box
Jack in the Box (JACK), a restaurant company, operates and franchises Jack in the Box quick-service restaurants and Qdoba Mexican Grill fast-casual restaurants in the U.S. This stock closed up 0.96% at $55.73 in Friday's trading session.
Friday's Volume: 753,000
Three-Month Average Volume: 462,340
Volume % Change: 72%
From a technical perspective, JACK trended modestly higher here with above-average volume. Shares of JACK have been trending sideways and consolidating for the last few weeks, with shares moving between $52.41 on the downside and $56.41 on the upside. Shares of JACK are now starting to bounce higher off the lower-end of its recent range and it's quickly approaching a near-term breakout trade. That trade will hit if JACK manages to take out the upper-end of its recent range at $56.41 to its 50-day moving average of $57.34 with high volume.
Traders should now look for long-biased trades in JACK as long as it's trending above some near-term support levels at $53.16 or at $52.41 and then once it sustains a move or close above those breakout levels with volume that's near or above 462,340 shares. If that breakout materializes soon, then JACK will set up to re-test or possibly take out its next major overhead resistance levels near $59 to $61.38. Any high-volume move above those levels will then give JACK a chance to tag its 52-week high of $62.90.
Avago Technologies (AVGO) is engaged in the design, development and supply of analog semiconductor devices with a focus on III-V based products. This stock closed up 0.81% at $68.48 in Friday's trading session.
Friday's Volume: 5.20 million
Three-Month Average Volume: 3.34 million
Volume % Change: 50%
From a technical perspective, AVGO trended modestly higher here right above some near-term support levels at $67.11 to $66 with above-average volume. This move higher on Friday is quickly pushing shares of AVGO within range of triggering a big breakout trade. That trade will hit if AVGO manages to take out Friday's intraday high of $68.93 to its 52-week high of $69.60 with high volume.
Traders should now look for long-biased trades in AVGO as long as it's trending above some key near-term support around $66 and then once it sustains a move or close above those breakout levels with volume that's near or above 3.34 million shares. If that breakout materializes soon, then AVGO will set up to enter new 52-week-high territory above $69.60, which is bullish technical price action. Some possible upside targets off that breakout are $75 to $80. 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.