3 Stocks Spiking on Unusual Volume

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.

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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.

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With that in mind, let's take a look at several stocks rising on unusual volume recently.

Insmed (INSM), a biopharmaceutical company, focuses on developing and commercializing inhaled therapies for patients with serious lung diseases. This stock closed up 3.3% at $14.51 in Wednesday's trading session.

Wednesday's Volume: 1.56 million
Three-Month Average Volume: 823,433
Volume % Change: 165%

From a technical perspective, INSM trended higher here with strong upside volume flows. This stock recently collapsed from its high of $20.04 to its low of $11.90. During that downtrend, shares of INSM have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of INSM have now started to form a V-shaped bottom off that $11.90 low as the stock has spiked back to its current price of $14.50. Market players should now look for a continuation move higher in the short-term if INSM manages to take out Wednesday's high of $15.07 to its 200-day moving average of $15.76 with high volume.

Traders should now look for long-biased trades in INSM as long as it's trending above Wednesday's low of $13.50 or above $13 and then once it sustains a move or close above $15.07 to $15.76 with volume that's near or above 823,433 shares. If that move kicks off soon, then INSM will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $17.54 to $18.

SunEdison (SUNE) develops, manufactures and sells silicon wafers to the semiconductor industry. This stock closed up 1.3% at $20.33 in Wednesday's trading session.

Wednesday's Volume: 25.25 million
Three-Month Average Volume: 12.94 million
Volume % Change: 405%

From a technical perspective, SUNE trended modestly higher here and broke out above some near-term overhead resistance at $20.30 with monster upside volume. This move is quickly pushing shares of SUNE within range of triggering a much bigger breakout trade. That trade will hit if SUNE manages to take out some key near-term overhead resistance levels at $21.76 to its 52-week high at $21.93 with high volume.

Traders should now look for long-biased trades in SUNE as long as it's trending above its 50-day at $18.45 or above $18 and then once it sustains a move or close above those breakout levels with volume that's near or above 12.94 million shares. If that breakout triggers soon, then SUNE will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $30.

Illumina (ILMN) develops, manufactures and markets life science tools and integrated systems for the analysis of genetic variation and function in North America, Europe, Latin America, the Asia-Pacific, the Middle East and South Africa This stock closed up 3.8% at $153.69 in Wednesday's trading session.

Wednesday's Volume: 5.51 million
Three-Month Average Volume: 2.24 million
Volume % Change: 186%

From a technical perspective, ILMN gapped up notably higher here with heavy upside volume. This move briefly pushed shares of ILMN back above its 50-day moving average of $157.25, before the stock closed just below that level at $153.69. This spike higher on Wednesday is starting to push shares of ILMN within range of triggering a near-term breakout trade. That trade will hit if ILMN manages to take out Wednesday's high of $158.50 to some more near-term overhead resistance at $162.21 with high volume.

Traders should now look for long-biased trades in ILMN as long as it's trending above Wednesday's low of $149.31 or above $146.50 and then once it sustains a move or close above those breakout levels with volume that's near or above 2.24 million shares. If that breakout kicks off soon, then ILMN will set up to re-test or possibly take out its next major overhead resistance levels at $167 to $170. Any high-volume move above those levels will then give ILMN a chance to tag its 52-week high at $183.30.

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.

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