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.
With that in mind, let's take a look at several stocks rising on unusual volume recently.
ZS Pharma (ZSPH) , a development stage biopharmaceutical company, focuses on the development and commercialization of non-absorbed drugs to treat renal, cardiovascular, liver and metabolic diseases. This stock closed up 5.3% at $39.33 in Monday's trading session.
Monday's Volume: 213,000
Three-Month Average Volume: 106,683
Volume % Change: 95%
From a technical perspective, ZSPH spiked sharply higher here right above some near-term support at around $36 to $35.50 with above-average volume. This jump to the upside on Monday is quickly pushing shares of ZSPH within range of triggering a near-term breakout trade. That trade will hit if ZSPH manages to take out Monday's intraday high of $39.95 to some more key overhead resistance at $40.75 with high volume.
Traders should now look for long-biased trades in ZSPH as long as it's trending above Monday's intraday low of $36.50 and then once it sustains a move or close above those breakout levels with volume that this near or above 106,683 shares. If that breakout gets underway soon, then ZSPH will set up to re-test or possibly take out its next major overhead resistance level at its all-time high of $43. Any high-volume move above $43 will then give ZSPH a chance to make a run at $50.
Craft Brew Alliance
Craft Brew Alliance (BREW) - Get Report is engaged in brewing, marketing, and selling craft beers and ciders under the Kona, Widmer Brothers, Redhook, Omission, and Square Mile brand names in the U.S. This stock closed up 5.4% at $14.11 in Monday's trading session.
Monday's Volume: 119,000
Three-Month Average Volume: 47,691
Volume % Change: 125%
From a technical perspective, BREW ripped sharply higher here back above its 200-day moving average of $13.68 with above-average volume. This sharp spike to the upside on Monday also pushed shares of BREW into breakout territory, since this stock took out some near-term overhead resistance at $13.90. Shares of BREW have been uptrending very strong over the last three months and change, with shares moving higher from its low of $10.07 to its intraday high of $14.12. During that move, shares of BREW have been consistently making higher lows and higher highs, which is bullish technical price action.
Traders should now look for long-biased trades in BREW as long as it's trending above some key near-term support levels at $12.89 or above its 50-day moving average of $12.53 and then once it sustains a move or close above Monday's intraday high of $14.12 with volume that's near or above 47,691 shares. If that move kicks off soon, then BREW will set up to re-test or possibly take out its next major overhead resistance levels at $16 to $16.96, or even $18 to its 52-week high at $18.70.
Monday's Volume: 5.77 million
Three-Month Average Volume: 2.40 million
Volume % Change: 177%
From a technical perspective, LPI ripped sharply higher here right above its new 52-week low of $21.06 with strong upside volume flows. This stock has been downtrending badly for the last three months, with shares moving lower from its high of $31.23 to its recent 52-week low of $21.06. During that downtrend, shares of LPI have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of LPI are now starting to rebound off that $21.06 low and it's potentially setting up for a trend reversal from bearish to bullish.
Traders should now look for long-biased trades in LPI as long as it's trending above its new 52-week low of $21.06 and then once it sustains a move or close above Monday's intraday high of $22.90 with volume that's near or above 2.40 million shares. If that move gets underway soon, then LPI will set up to re-test or possibly take out its next major overhead resistance levels at $24.54 to its 50-day moving average at $24.58. Any high-volume move above those levels will then give LPI a chance to tag its 200-day moving average of $26.51.
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.