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.
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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.
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With that in mind, let's take a look at several stocks rising on unusual volume recently.
Compass Minerals
Compass Minerals (CMP) is a producer of minerals, including salt, sulfate of potash specialty fertilizer and magnesium chloride. This stock closed up 1% at $80.09 in Monday's trading session.
Monday's Volume: 491,000
Three-Month Average Volume: 172,019
Volume % Change: 166%
From a technical perspective, CMP trended modestly higher here right above its 200-day moving average of $78.52 with above-average volume. This move is starting to push shares of CMP within range of triggering a major breakout trade. That trade will hit if CMP manages to take out Monday's intraday high of $80.52 and then when it clears some key near-term overhead resistance at $81.77 with strong upside volume.
Traders should now look for long-biased trades in CMP as long as it's trending above its 200-day at $78.52 and then once it sustains a move or close above those breakout levels with volume that hits near or above 172,019 shares. If that breakout hits soon, then CMP will set up to re-fill some of its previous gap-down-zone from last July that started just above $87.
Fonar
Fonar (FONR) is engaged in the design, manufacture, sale and servicing of magnetic resonance imaging scanners for the detection and diagnosis of human diseases, abnormalities, injuries, and other medical conditions. This stock closed up 20.1% at $23.99 in Monday's trading session.
Monday's Volume: 1.11 million
Three-Month Average Volume: 279,587
Volume % Change: 260%
From a technical perspective, FONR exploded higher here and broke out above some near-term overhead resistance levels at $21.45 to $22.34 with heavy upside volume. This breakout pushed shares of FONR into new 52-week-high territory, which is bullish technical price action. Market players should now look for a continuation move higher in the short-term if FONR can manage to take out Monday's high of $24.09 with high volume.
Traders should now look for long-biased trades in FONR as long as it's trending above $22 or above Monday's low of $20 and then once it sustains a move or close above $24.09 with volume that's near or above 279,587 shares. If we get that move soon, then FONR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $28 to $30.
BP Prudhoe Bay Royalty Trust
BP Prudhoe Bay Royalty Trust (BPT) operates as a grantor trust in the U.S. The company holds overriding royalty interests constituting a non-operational interest in minerals in the Prudhoe Bay oil field located on the North Slope in Alaska. This stock closed up 3.4% at $81.50 in Monday's trading session.
Monday's Volume: 298,000
Three-Month Average Volume: 110,108
Volume % Change: 211%H
From a technical perspective, BPT spiked higher here right above its 50-day moving average of $78.21 with above-average volume. This move is quickly pushing shares of BPT within range of triggering a major breakout trade. That trade will hit if BPT manages to take out some key overhead resistance levels at $81.50 to its 200-day moving average of $82.28 with high volume.
Traders should now look for long-biased trades in BPT as long as it's trending above Monday's low of $79.35 or above its 50-day at $78.21 and then once it sustains a move or close above those breakout levels with volume that's near or above 110,108 shares. If that breakout hits soon, then BPT will set up to re-test or possibly take out its next major overhead resistance levels at $86 to $87.62.
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.
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