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 PharmaTech (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 5.6% at $39.07 in Wednesday's trading session.
Wednesday's Volume: 1.89 million
Three-Month Average Volume: 785,333
Volume % Change: 192%
From a technical perspective WX jumped sharply higher here right off its 50-day moving average of $36.79 with above-average volume. This move is quickly pushing shares of WX within range of triggering a major breakout trade. That trade will hit if WX manages to take out some key overhead resistance levels at $39.49 to its 52-week high at $40.72 with high volume.
Traders should now look for long-biased trades in WX as long as it's trending above its 50-day at $36.79 or above $36 and then once it sustains a move or close above those breakout levels with volume that this near or above 785,333 shares. If that breakout hits 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 breakout are $45 to $50.
NewLink Genetics (NLNK) - Get Report, a biopharmaceutical company, through its subsidiary, BioProtection Systems, focuses on discovering, developing and commercializing immunotherapeutic products to enhance cancer treatment options for patients and physicians. This stock closed up 3.9% at $31.69 in Wednesday's trading session.
Wednesday's Volume: 1.24 million
Three-Month Average Volume: 542,185
Volume % Change: 122%
From a technical perspective, NLNK bounced higher here off its intraday low of $26.93 with strong upside volume. This stock has been downtrending badly for the last few weeks, with shares plunging from its high of $53.48 to its intraday low of $26.93. During that downtrend, shares of NLNK have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of NLNK might now be setting up for a relief rally since volume has showed up here as the stock closed near its daily high of $32.
Traders should now look for long-biased trades in NLNK as long as it's trending above $30 or $29 and then once it sustains a move or close above some near-term overhead resistance at $32.50 with volume that's near or above 542,185 shares. If we get that move soon, then NLNK will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $34.82 or at around $40.
Five Prime Therapeutics (FPRX) - Get Report, a clinical-stage biotechnology company, focuses on the discovery and development of protein therapeutics that block cancer and inflammatory disease processes. This stock closed up 9% to $17.90 in Wednesday's trading session.
Wednesday's Volume: 194,000
Three-Month Average Volume: 108,735
Volume % Change: 117%
From a technical perspective, FPRX spiked sharply higher here right off its 50-day moving average of $16.29 with above-average volume. This move briefly pushed shares of FPRX into breakout territory, since the stock flirted with some near-term overhead resistance at $18.19. Shares of FPRX closed just below that breakout level at $17.90. Market players should now look for a continuation move higher in the short-term if FPRX manages to take out Wednesday's high of $18.25 with strong volume.
Traders should now look for long-biased trades in FPRX as long as it's trending above its 50-day at $16.29 or above more near-term support at $15 and then once it sustains a move or close above $18.25 with volume that hits near or above 108,735 shares. If that move gets started soon, then FPRX will set up to re-test or possibly take out its all-time high at $21.68.
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.