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.
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.
WuXi Pharma Tech (WX) , through its subsidiaries, operates as a pharmaceutical, biotechnology and medical device research and development outsourcing company in China and the U.S. This stock closed up 3.4% at $39.86 in Monday's trading session.
Monday's Volume: 1.50 million
Three-Month Average Volume: 683,312
Volume % Change: 109%
From a technical perspective, WX jumped higher here into new 52-week-high territory which above-average volume. This stock recently formed a double bottom chart pattern at $32.50 to $32.40. Following that bottom, shares of WX have entered an uptrend, with shares moving higher from its low $32.40 to its intraday high of $40.61. During that uptrend, shares of WX have been consistently making higher lows and higher highs, which is bullish technical price action.
Traders should now look for long-biased trades in WX as long as it's trending above some key near-term support levels at $38 or at its 50-day moving average of $36.04 and then once it sustains a move or close above Monday's high of $40.61 with volume that's near or above 683,312 shares. If we get that move soon, then WX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $45 to $50.
Mirati Therapeutics (MRTX) - Get Report, a biopharmaceutical company, engages in the development of therapeutics for the cancer treatment. This stock closed up 7.6% to $23.28 in Monday's trading session.
Monday's Volume: 122,000
Three-Month Average Volume: 63,871
Volume % Change: 135%
From a technical perspective, MRTX ripped sharply higher here and broke out into new all-time-high territory above some near-term overhead resistance levels at $22.54 to $22.85 with strong upside volume. This breakout has now pushed shares of MRTX above the upper-end of its recent range, which saw the stock trend between $18.50 on the downside and $22.85 on the upside. Market players should now look for a continuation move higher in the short-term if MRTX manages to take out Monday's high of $24.09 with high volume.
Traders should now look for long-biased trades in MRTX as long as it's trending above Monday's low of $21.60 and then once it sustains a move or close above $24.09 with volume that this near or above 63,871 shares. If we get that move soon, then MRTX will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $28 to $30.
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.