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
) operates an online trading site for the Latin American markets. This stock closed up 3.3% to $115.62 in Monday's trading session.
Monday's Volume: 1.07 million
Three-Month Average Volume: 591,932
Volume % Change: 87%
From a technical perspective, MELI spiked higher here back above its 50-day moving average of $112.44 with above-average volume. This stock also broke out above some near-term overhead resistance at $113.49. Shares of MELI are now starting to move within range of triggering another near-term breakout trade. That trade will hit if MELI manages to take out some near-term overhead resistance levels at $117.45 to $121.13 with high volume.
Traders should now look for long-biased trades in MELI as long as it's trending above $113.49 or its 50-day at $112.44 and then once it sustains a move or close above those breakout levels with volume that hits near or above 591,932 shares. If that breakout triggers soon, then MELI will set up to re-test or possibly take out its 52-week high at $128.46.
Keep in mind that MELI reports earnings on Thursday, August 1, 2013 after the market close. Look to play MELI for some upside above $117.45 ahead of the quarter and then possibly above $121.13 after the quarter if the stock reacts positively to earnings.
Alliance Fiber Optic Products
Alliance Fiber Optic Products
) designs, manufactures and markets a range of fiber optic components, and integrated modules incorporating these components, for communications equipment manufacturers and service providers. This stock closed up 1.2% at $34.34 in Monday's trading session.
Monday's Volume: 540,000
Three-Month Average Volume: 225,930
Volume % Change: 81%
From a technical perspective, AFOP trended higher here into new 52-week high territory with above-average volume. This stock broke out above some near-term overhead resistance levels on Monday at $33.83 to $34.77. At last check, AFOP hit an intraday high of $35.37 with volume that was well above its three-month average action of 225,930 shares. This stock closed back below those breakout levels, since it finished the trading session at $34.34.
Traders should now look for long-biased trades in AFOP as long as it's trending above $32 or $31 and then once it sustains a move or close above Monday's high of $35.37 with volume that's near or above 225,930 shares. If we get that move soon, then AFOP 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 $45.
) is a global provider of additive manufacturing solutions for the creation of parts used in the processes of designing and manufacturing products and for the direct manufacture of end parts. This stock closed up 4.7% at $92.32 in Monday's trading session.
Monday's Volume: 1 million
Three-Month Average Volume: 781,265
Volume % Change: 50%
From a technical perspective, SSYS ripped sharply higher here right above its 50-day moving average of $86.11 with strong upside volume. This stock has been uptrending strong for the last five months, with shares soaring higher from its low of $60.20 to its recent high of $96.44. During that move, shares of SYSS have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SSYS within range of triggering a major breakout trade. That trade will hit if SSYS manages to take out some near-term overhead resistance levels at $95 to its 52-week high at $96.44 with high volume.
Traders should now look for long-biased trades in SSYS as long as it's trending above its 50-day at $86.11 and then once it sustains a move or close above those breakout levels with volume that's near or above 781,265 shares. If that breakout hits soon, then SSYS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $100 to $105, or even $110.
To see more stocks rising on unusual volume, check out the
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-- 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.