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.
Ubiquiti Networks (UBNT) , together with its subsidiaries, offers a portfolio of networking products and solutions for service providers and enterprises. This stock closed up 10.2% to $50 in Tuesday's trading session.
Tuesday's Volume: 4.49 million
Three-Month Average Volume: 1.06 million
Volume % Change: 334%
From a technical perspective, UBNT spiked sharply higher here and broke out into new all-time-high territory above resistance at $48 with monster upside volume. This powerful breakout saw shares of UBNT close very close to its intraday high of $50.30, since the stock finished the trading session at $50. Market players should now look for a continuation move higher in the short-term if UBNT manages to take out Tuesday's high of $50.30 with strong volume.
Traders should now look for long-biased trades in UBNT as long as it's trending above $48 or $46 and then once it sustains a move or close above its new all-time high at $50.30 with volume that hits near or above 1.06 million shares. If we get that move soon, then UBNT will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $60 to $70.
Parametric Sound (PAMT) , an audio technology company, designs and markets audio peripherals for video game consoles, personal computers and mobile devices. This stock closed up 3.8% at $15.30 in Tuesday's trading session.
Tuesday's Volume: 308,000
Three-Month Average Volume: 75,127
Volume % Change: 358%
From a technical perspective, PAMT jumped higher here back above its 200-day moving average of $15.01 with strong upside volume. This stock has been trending sideways for the last month and change, with shares moving between $13.14 on the downside and $16.36 on the upside. Shares of PAMT are now starting to push within range of triggering a big breakout trade above some key near-term overhead resistance levels. That trade will hit if PAMT manages to take out Tuesday's high of $15.70 and then once it clears more resistance levels at $16.36 to $16.76 with high volume.
Traders should now look for long-biased trades in PAMT as long as it's trending above Tuesday's low of $14.74 and then once it sustains a move or close above those breakout levels with volume that this near or above 75,127 shares. If that breakout hits soon, then PAMT will set up to re-test or possibly take out its next major overhead resistance levels at $18.38 to $20, or even its 52-week high at $22.39.
VirnetX (VHC) - Get VirnetX Holding Corporation Report develops software and technology solutions for securing real-time communications over the Internet. This stock closed up 8.2% at $19.50 in Tuesday's trading session.
Tuesday's Volume: 1.05 million
Three-Month Average Volume: 370,077
Volume % Change: 214%
From a technical perspective, VHC ripped sharply higher here back above its 50-day moving average of $18.50 with strong upside volume. This move on Tuesday was a continuation leg higher that has now pushed shares of VHC out of its recent downtrend and above a key descending trend line. Shares of VHC are now quickly moving within range of triggering a near-term breakout trade. That trade will hit if VHC manages to take out its 200-day moving average of $20.09 to some more near-term overhead resistance at $20.53 with high volume.
Traders should now look for long-biased trades in VHC as long as it's trending above its 50-day at $18.50 or above Tuesday's low of $17.96 and then once it sustains a move or close above those breakout levels with volume that's near or above 370,777 shares. If that breakout hits soon, then VHC will set up to re-test or possibly take out its next major overhead resistance levels at $23.20 to $26.25.
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.