3 Stocks Breaking Out 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.

Federated National (FNHC), through its subsidiaries, is engaged in the insurance underwriting, distribution and claims processing in the U.S. This stock closed up 7.7% at $24.36 in Monday's trading session.

Monday's Volume: 432,000
Three-Month Average Volume: 199,846
Volume % Change: 102%

From a technical perspective, FNHC surged sharply higher here right off some near-term support at $22 and back above its 50-day moving average of $23.84 with strong upside volume. This sharp move to the upside on Monday also pushed shares of FNHC into breakout territory, since the stock took out some key near-term overhead resistance levels at $23.70 to $23.98. Market players should now look for a continuation move to the upside in the short-term if FNHC can manage to take out Monday's intraday high of $24.58 with high volume.

Traders should now look for long-biased trades in FNHC as long as it's trending above $23 or above Monday's intraday low of $22.15 and then once it sustains a move or close above $24.58 with volume that's near or above 199,846 shares. If that move begins soon, then FNHC will set up to re-test or possibly take out its next major overhead resistance levels at $26 to its 52-week high at $26.60. Any high-volume move above those levels will then give FNHC a chance to tag $30.

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Nielsen (NLSN) provides media and marketing information, analytics and industry expertise about what consumers watch and listen. This stock closed up 1.1% at $48.77 in Monday's trading session.

Monday's Volume: 2.87 million
Three-Month Average Volume: 1.72 million
Volume % Change: 71%

From a technical perspective, NLSN jumped modestly higher here right off its 50-day moving average of $47.90 with above-average volume. This stock has been uptrending over the last four months, with shares moving higher from its low of $42.32 to its recent high of $49.61. During that uptrend, shares of NLSN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of NLSN within range of triggering a big breakout trade. That trade will hit if NLSN manages to take out some key near-term overhead resistance levels at $48 to its 52-week high at $49.61 with high volume.

Traders should now look for long-biased trades in NLSN as long as it's trending above Monday's intraday low of $47.51 or above more near-term support at $47 and then once it sustains a move or close above those breakout levels with volume that's near or above 1.72 million shares. If that breakout kicks off soon, then NLSN will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $60.

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SouFun (SFUN) operates a real estate Internet portal, and a home furnishing and an improvement Website in the People's Republic of China. This stock closed up 2.8% at $12.45 in Monday's trading session.

Monday's Volume: 11.68 million
Three-Month Average Volume: 7.37 million
Volume % Change: 85%

From a technical perspective, SFUN jumped higher here right above some near-term support at $12 with above-average volume. This stock has been uptrending very strong for the last few weeks, with shares moving higher from its low of $9.19 to its recent high of $12.70. During that uptrend, shares of SFUN have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SFUN within range of triggering a big breakout trade. That trade will hit if SFUN manages to take out some key near-term overhead resistance levels at $12.70 to its 200-day moving average at $13.36 and then above some past resistance at $13.40 with high volume.

Traders should now look for long-biased trades in SFUN as long as it's trending above some near-term support at $12 or above more support at $11 and then once it sustains a move or close above those breakout levels with volume that's near or above 7.37 million shares. If that breakout gets set off soon, then SFUN will set up to re-test or possibly take out its next major overhead resistance levels at $14.64 to $15.67, or even $17.

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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