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.
Timken
Timken (TKR) engineers, manufactures and markets mechanical components, bearings, and engineered steel bars and tubes worldwide. This stock closed up 3.1% at $49.73 in Wednesday's trading session.
Wednesday's Volume: 2.49 million
Three-Month Average Volume: 1.10 million
Volume % Change: 271%
From a technical perspective, TKR ripped higher here right above some near-term support at $47.61 with above-average volume. This spike higher on Wednesday briefly pushed shares of TKR into breakout territory, since the stock flirted with its former 52-week high at $49.76. Shares of TKR tagged an intraday high of $49.83, before closing just below that level at $49.73. Market players should now look for a continuation move to the upside in the short-term if TKR manages to take out its new 52-week high at $49.83 with strong upside volume flows.
Traders should now look for long-biased trades in TKR as long as it's trending above Wednesday's low of $47.96 or above its 50-day at $46.25 and then once it sustains a move or close above $49.83 with volume that this near or above 1.10 million shares. If that move gets set off soon, then TKR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $55 to $60.
Montage Technology Group
Montage Technology Group (MONT), through its subsidiaries, designs, develops and markets various analog and mixed-signal semiconductor solutions for the home entertainment and cloud computing markets. This stock closed up 2.2% at $21.36 in Wednesday's trading session.
Wednesday's Volume: 870,000
Three-Month Average Volume: 455,246
Volume % Change: 110%
From a technical perspective, MONT jumped higher here right above some near-term support levels at $20.50 to its 50-day moving average of $20.03 with above-average volume. This spike higher on Wednesday is starting to push shares of MONT within range of triggering a near-term breakout trade. That trade will hit if MONT manages to take out some key overhead resistance levels at $21.80 to $22.36 with high volume.
Traders should now look for long-biased trades in MONT as long as it's trending above its 50-day moving average at $20.03 or above more near-term support at $19.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 455,246 shares. If that breakout kicks off soon, then MONT will set up to re-test or possibly take out its next major overhead resistance levels at $23.50 to $24, or even $25.
LGI Homes
LGI Homes (LGIH) designs and constructs entry-level homes in Texas, Arizona, Florida, Georgia and New Mexico, the U.S. This stock closed up 3.7% at $19.40 in Wednesday's trading session.
Wednesday's Volume: 130,000
Three-Month Average Volume: 98,444
Volume % Change: 50%
From a technical perspective, LGIH ripped higher here right above some near-term support at $18 and broke out above some near-term overhead resistance levels at $19.23 to $19.30 with above-average volume. This spike higher on Wednesday is quickly pushing shares of LGIH within range of triggering an even bigger breakout trade. That trade will hit if LGIH manages to take out Wednesday's intraday high of $19.66 to its all-time high at $20.75 with high volume.
Traders should now look for long-biased trades in LGIH as long as it's trending above Wednesday's low of $18.60 or above $18 and then once it sustains a move or close above those breakout levels with volume that's near or above 98,444 shares. If that breakout gets started soon, then LGIH will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $30.
IXYS
IXYS (IXYS), an integrated semiconductor company, designs, develops, manufactures and markets power semiconductors, digital and analog integrated circuits, and systems and radio frequency power semiconductors worldwide. This stock closed up 3.5% at $12.76 in Wednesday's trading session.
Wednesday's Volume: 384,000
Three-Month Average Volume: 147,278
Volume % Change: 115%
From a technical perspective, IXYS jumped higher here right above some near-term support around $12 with above-average volume. This stock recently gapped up sharply from around $11 to close to $12.50 with monster upside volume. Following that move, shares of IXYS briefly pulled back off its high of $12.99 to just below $12 with strong downside volume. Shares of IXYS are now starting to rebound just above the intraday low of its gap-up-day zone and it's quickly moving within range of triggering a major breakout trade. That trade will hit if IXYS manages to take out Wednesday's intraday high of $12.82 to some more key overhead resistance at $12.99 with high volume.
Traders should now look for long-biased trades in IXYS as long as it's trending above its 200-day at $11.53 and then once it sustains a move or close above those breakout levels with volume that's near or above 147,278 shares. If that breakout gets underway soon, then IXYS will set up to re-test or possibly take out its next major overhead resistance levels at $14 to its 52-week high of $14.95.
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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