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.
Must Read: Warren Buffett's Top 10 Dividend Stocks
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.
With that in mind, let's take a look at several stocks rising on unusual volume recently.
Must Read: 10 Stocks Billionaire John Paulson Loves in 2014
Tortoise Energy Independence
Tortoise Energy Independence (NDP) is a non-diversified closed-end management investment company. This stock closed up 2.6% at $21.34 in Wednesday's trading session.
Wednesday's Volume: 338,000
Three-Month Average Volume: 71,365
Volume % Change: 396%
From a technical perspective, NDP bounced notably higher here off its new 52-week low of $20 with strong upside volume flows. This stock has extreme selling volatility to the downside over the last month and change, with shares falling sharply lower from $27.63 to its new 52-week low of $20. During that extreme price trend lower, shares of NDP have been consistently making lower highs and lower lows, which is bearish technical price action. Also during that downtrend, shares of NDP have seen wide intraday volatility as the stock has now been pushed into oversold territory, since its relative strength index reading is 18. Oversold can always get more oversold, but it's also an area from which a stock can snap back sharply higher.
Traders should now look for long-biased trades in NDP as long as it's trending above its new 52-week low of $20 and then once it sustains a move or close above Wednesday's intraday high of $21.39 with volume that hits near or above 71,365 shares. If that move gets going soon, then NDP will set up to re-test or possibly take out its next major overhead resistance levels at $23 to $24, or even its 200-day at $25.22 to its 50-day at $25.58.
Must Read: Hedge Funds Love These 5 Stocks -- but Should You?
U.S. Silica
U.S. Silica (SLCA) produces and sells commercial silica in the U.S. This stock closed up 4.5% to $42.15 in Wednesday's trading session.
Wednesday's Volume: 4.60 million
Three-Month Average Volume: 2.12 million
Volume % Change: 135%
From a technical perspective, SLCA bounced sharply higher here off its intraday low of $38.13 with strong upside volume flows. This stock has seen extreme volatility over the last month, with shares dropping dramatically lower from its high of $73.05 to its intraday low of $38.13. During that move, shares of SLCA have experienced wide intraday price swings as it's consistently made lower highs and lower lows, which is bearish technical price action. This wild volatility has now pushed shares of SLCA into oversold territory, since its current relative strength index reading is 22. Oversold can always get more oversold, but it's also an area from which a stock can experience a sharp rebound higher in price.
Traders should now look for long-biased trades in SLCA as long as it's trending above its intraday low of $38.13 and then once it sustains a move or close above its intraday high of $42.96 with volume that hits near or above 2.12 million shares. If that move starts soon, then SLCA will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $47.34 to $52.50.
Must Read: 4 Defensive Stock Trades to Protect Your Portfolio
Halliburton
Halliburton (HAL) provides a range of services and products for the exploration, development, and production of oil and natural gas to oil and gas companies worldwide. This stock closed up 2% to $50.64 in Wednesday's trading session.
Wednesday's Volume: 30.37 million
Three-Month Average Volume: 8.68 million
Volume % Change: 284%
From a technical perspective, HAL bounced modestly higher here right off its intraday low of $47.60 with strong upside volume flows. This stock has been downtrending badly for the last two months and change, with shares falling sharply from $74.16 to its intraday low of $48.17. During that move, shares of HAL have been consistently making lower highs and lower lows, which is bearish technical price action. Over the last two weeks, shares of HAL have experienced extreme levels of intraday volatility, with the stock moving multiple points lower during those trading sessions. This rise in volatility over the longer-term and short-term time frames for shares of HAL have now pushed the stock into extremely oversold territory, since its current relative strength index reading is 18.9. Oversold can always get more oversold, but it's also an area from which a stock can experience a powerful bounce higher.
Traders should now look for long-biased trades in HAL as long as it's trending above Wednesday's intraday low of $48.17 or above its 52-week low of $47.60 and then once it sustains a move or close above Wednesday's intraday high of $51.29 to $52 with volume that hits near or above 8.68 million shares. If that move materializes soon, then HAL will set up to re-test or possibly take out its next major overhead resistance levels near $57 to $60.
Must Read: 5 Breakout Trades That Are Beating the Market's Slump
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.
RELATED LINKS:
>>5 Hated Earnings Stocks You Should Love
>>5 Rocket Stocks to Buy in a Shaky Market
>>4 Tech Stocks Under $10 to Trade for Breakouts
Follow Stockpickr on Twitter and become a fan on Facebook.
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.
No comments:
Post a Comment