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.
Alliance Fiber Optic Products (AFOP) designs, manufactures and markets various fiber optic components and integrated modules for communications equipment manufacturers and service providers in North America, Europe and Asia. This stock closed up 6.8% to $19.62 in Monday's trading session.
Monday's Volume: 1.73 million
Three-Month Average Volume: 677,671
Volume % Change: 185%
From a technical perspective, AFOP ripped sharply higher here and broke out above some near-term overhead resistance at $19.38 with above-average volume. This stock has been uptrending strong for the last three months, with shares moving higher from its low of $11.16 to its intraday high of $20.02. During that uptrend, shares AFOP have been consistently making higher lows and higher highs, which is bullish technical price action. Market players should now look for a continuation move to the upside in the short-term if AFOP can manage to take out Monday's high of $20.02 with strong volume.
Traders should now look for long-biased trades in AFOP as long as it's trending above Monday's low of $18.61 or above $17 and then once it sustains a move or close above $20.02 with volume that hits near or above 677,671 shares. If that move materializes soon, then AFOP will set up to re-test or possibly take out its next major overhead resistance levels at $21.50 to its 52-week high at $23.94.
Holly Energy Partners (HEP) - Get Holly Energy Partners, L.P. Report operates petroleum product and crude pipelines, storage tanks, distribution terminals and loading rack facilities. This stock closed up 3.6% at $32.92 in Monday's trading session.
Monday's Volume: 335,000
Three-Month Average Volume: 85,511
Volume % Change: 298%
From a technical perspective, HEP trended higher here back above both it 50-day moving average of $32.63 and its 200-day moving average of $32.74 with strong upside volume. This stock recently formed a V-shaped bottom from its high of $33.78 to its low of $29.83. Once HEP hit that $29.83 low, the stock has now started to rebound sharply and rally back above those two key moving averages. Market players should now look for a continuation move higher in the short-term if HEP manages to take out Monday's high of $33 with high volume.
Traders should now look for long-biased trades in HEP as long as it's trending above Monday's low of $31.85 and then once it sustains a move or close above $33 with volume that hits near or above 85,511 shares. If that move gets underway soon, then HEP will set up to re-test or possibly take out its next major overhead resistance levels at $34 to $37, or even around $38.
Murphy USA (MUSA) - Get Murphy USA, Inc. Report operates a chain of retail stations in the U.S. offering motor fuel products and convenience merchandise. This stock closed up 3.3% at $42.92 in Monday's trading session.
Monday's Volume: 647,000
Three-Month Average Volume: 413,398
Volume % Change: 85%
From a technical perspective, MUSA trended higher here right above its 50-day moving average of $40.63 with above-average volume. This move briefly pushed shares of MUSA into breakout territory, since the stock flirted with some near-term overhead resistance at $42.97. Shares of MUSA tagged an intraday high of $43.10, before closing just below that level at $42.92. Market players should now look for a continuation move higher in the short-term if MUSA manages to clear Monday's high of $43.10 to some past overhead resistance at $43.88 with high volume.
Traders should now look for long-biased trades in MUSA as long as it's trending above Monday's low of $41.67 or above its 50-day at $40.63 and then once it sustains a move or close above $43.10 to $43.88 with volume that's near or above 413,398 shares. If that move starts soon, then MUSA will set up to re-test or possibly take out its next major overhead resistance level at its all-time high of 46.91. Any high-volume move above that level will then give MUSA a chance to tag $50 or trend north of that price point.
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.