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 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.
NewLink Genetics (NLNK) , a biopharmaceutical company, focuses on discovering, developing and commercializing immunotherapeutic products to enhance treatment options for patients with cancer. This stock closed up 8.6% to $28.42 in Friday's trading session.
Friday's Volume: 1.31 million
Three-Month Average Volume: 593,968
Volume % Change: 302%
From a technical perspective, NLNK ripped sharply higher here right above its 200-day moving average of $25.67 with strong upside volume flows. This stock has been uptrending strong over the last few weeks, with shares moving higher from its low of $20.01 to its intraday high of $28.67. During that move, shares of NLNK have been consistently making higher lows and higher highs, which is bullish technical price action. Market players should now look for continuation move to the upside in the short-term if NLNK manages to take out Friday's intraday high of $28.67 with high volume.
Traders should now look for long-biased trades in NLNK as long as it's trending above its 200-day moving average of $25.67 and then once it sustains a move or close above $28.67 with volume that hits near or above 593,968 shares. If that move gets started soon, then NLNK will set up to re-test or possibly take out its next major overhead resistance levels at $33 to $35.