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
-- 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
) is engaged in developing, manufacturing and commercializing medicines designed to yield better therapeutic outcomes and improve the lives of patients with serious diseases. This stock closed up 2% to $33.63 in Monday's trading session.
Monday's Volume: 3.14 million
Three-Month Average Volume: 1.51 million
Volume % Change: 98%
From a technical perspective, ALKS trended up here and broke out above some near-term overhead resistance at $34.30 with heavy upside volume. This move also pushed shares of ALKS into new 52-week-high territory, since the stock hit an intraday high of $34.74.
Traders should now look for long-biased trades in ALKS as long as it's trending above $31.50 and then once it sustains a move or close above Monday's high of $34.74 with volume that hits near or above 1.51 million shares. If we get that move soon, then ALKS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $40 to $43.
) is a global, integrated specialty pharmaceutical company engaged in developing, manufacturing and distributing generic, brand and biosimilar products. This stock closed up 1.3% at $134.48 in Monday's trading session.
Monday's Volume: 2.44 million
Three-Month Average Volume: 1.76 million
Volume % Change: 59%
Shares of ACT spiked modestly higher on Monday after Leerink upgraded the stock to outperform from market perform, citing valuation and confidence in the company's ability to beat earnings expectations. The firm raised its price target to $155 from $133.
From a technical perspective, ACT trended up here and broke out above its 52-week and three-year highs at $133 with above-average volume. This breakout is coming off a major base and consolidation pattern for shares of ACT, since the stock had previously been trending range-bound between $118.68 on the downside and $133 on the upside.
Traders should now look for long-biased trades in ACT as long as it's trending above $130 or $128 and then once it sustains a move or close above its new 52-week high at $135.99 with volume that's near or above 1.76 million shares. If we get that move soon, then ACT will set up to enter new 52-week- and three-year-high territory, which is bullish technical price action. Some possible upside targets off that move are $140 to $145, or even $150 to $155.
To see more stocks rising on unusual volume, check out the
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
. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.