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.
MacroGenics (MGNX), a clinical-stage biopharmaceutical company, focuses on discovering and developing monoclonal antibody-based therapeutics for the treatment of cancer and autoimmune diseases. This stock closed up 4% to $24.17 in Wednesday's trading session.
Wednesday's Volume: 618,000
Three-Month Average Volume: 181,382
Volume % Change: 205%
From a technical perspective, MGNX ripped higher here right above some previous support from back in November of 2013 at $21.50 with strong upside volume. This spike higher on Wednesday is also coming off oversold levels, since its current relative strength index reading is 28.76. Oversold can always get more oversold, but it's also an area where a stock can make a significant rebound higher from.
Traders should now look for long-biased trades in MGNX as long as it's trending above Wednesday's low of $24.30 and then once it sustains a move or close above Wednesday's high of $24.30 to $25 with volume that hits near or above 181,382 shares. If that move kicks off soon, then MGNX could rebound higher towards $28 to $31, or even its 50-day moving average at $33.88.
Mallinckrodt (MNK) develops, manufactures, markets and distributes branded and generic specialty pharmaceuticals, active pharmaceutical ingredients and diagnostic imaging agents worldwide. This stock closed up 5.5% at $67.78 in Wednesday's trading session.
Wednesday's Volume: 6.17 million
Three-Month Average Volume: 1.62 million
Volume % Change: 383%
From a technical perspective, MNK spiked sharply higher here right off its 50-day moving average of $65.43 with heavy upside volume. This spike is coming after shares of MNK dropped sharply lower two trading sessions ago with extremely strong downside volume. That spike lower with volume looks to have exhausted the sellers in shares of MNK. Market players should now look for a continuation move higher in the short-term if MNK manages to take out Wednesday's high of $67.92 with strong volume.
Traders should now look for long-biased trades in MNK as long as it's trending above its 50-day at $65.43 or above $64 and then once it sustains a move or close above Wednesday's high of $67.92 with volume that hits near or above 1.62 million shares. If that move materializes soon, then MNK will set up to re-test or possibly take out its next major overhead resistance levels $70 to $71.51, or even its 52-week high at $72.93.
Digital Realty Trust
Digital Realty Trust (DLR), a real estate investment trust, through its controlling interest in Digital Realty Trust, L.P., engages in the ownership, acquisition, development, redevelopment and management of technology-related real estate. This stock closed up 1% at $54.18 in Wednesday's trading session.
Wednesday's Volume: 3.93 million
Three-Month Average Volume: 1.56 million
Volume % Change: 144%
From a technical perspective, DLR spiked modestly higher here right above its 50-day moving average of $52.07 with strong upside volume. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $48.85 to its recent high of $54.66. During that move, shares of DLR have been consistently making higher lows and higher highs, and it's moved back above both its 50-day and 200-day moving averages. Shares of DLR are now starting to move within range of triggering a major breakout trade. That trade will hit if DLR manages to take out some near-term overhead resistance levels at $54.66 to $56.62 with strong volume.
Traders should now look for long-biased trades in DLR as long as it's trending above its 50-day at $52.07 or above its 200-day at $51.54 and then once it sustains a move or close above those breakout levels with volume that's near or above 1.56 million shares. If that breakout kicks off soon, then DLR will set up to re-test or possibly take out its next major overhead resistance levels at $62.50 to $65.
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.