3 Unusual-Volume Biotech Stocks in Breakout Territory

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.

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

Cempra

Cempra (CEMP) , a clinical-stage pharmaceutical company, focuses on developing antibiotics to meet critical medical needs in the treatment of bacterial infectious diseases in North America. This stock closed up 8.9% at $10.89 in Friday's trading session.

Friday's Volume: 633,000
Three-Month Average Volume: 163,120
Volume % Change: 338%

From a technical perspective, CEMP exploded higher here right above its 50-day moving average of $9.81 and back above its 200-day moving average of $10.77 with monster upside volume flows. This sharp spike to the upside on Friday also pushed shares of CEMP into breakout territory, since the stock took out some near-term overhead resistance at $10.87. Market players should now look for a continuation move to the upside in the short-term if CEMP manages to clear Friday's intraday high of $11.23 to some more near-term overhead resistance at $11.60 with high volume.

Traders should now look for long-biased trades in CEMP as long as it's trending above Friday's intraday low of $10.05 or above its 50-day at $9.81 and then once it sustains a move or close above $11.23 to $11.60 with volume that's near or above 163,120 shares. If that move kicks off soon, then CEMP will set up to re-test or possibly take out its next major overhead resistance levels at $12 to $12.50 or even $13.90.

Karyopharm Therapeutics

Karyopharm Therapeutics (KPTI) , a clinical-stage pharmaceutical company, focuses on the discovery and development of drugs directed against nuclear transport targets for the treatment of cancer and other major diseases. This stock closed up 10.5% at $42.10 in Friday's trading session.

Friday's Volume: 1.09 million
Three-Month Average Volume: 284,508
Volume % Change: 475%

From a technical perspective, KPTI exploded higher here right above its 50-day moving average of $37.43 with monster upside volume flows. This large move to the upside on Friday also pushed shares of KPTI into breakout territory, since the stock took out some near-term overhead resistance at $41.49. Market players should now look for a continuation move to the upside in the short-term if KPTI manages to take out Friday's intraday high of $44.22 with high volume.

Traders should now look for long-biased trades in KPTI as long as it's trending above $40 or above $38 and then once it sustains a move or close above Friday's intraday high of $44.22 with volume that hits near or above 284,508 shares. If that move begins soon, then KPTI will set up to re-test or possibly take out its next major overhead resistance levels at $47.89 to its all-time high of $47.98.

Auspex Pharmaceuticals

Auspex Pharmaceuticals (ASPX) , a biopharmaceutical company, focuses on developing and commercializing novel medicines for the treatment of orphan diseases. This stock closed up 8.6% to $24.64 in Friday's trading session.

Friday's Volume: 288,000
Three-Month Average Volume: 138,759
Volume % Change: 137%

From a technical perspective, ASPX ripped sharply higher here right above its 50-day moving average of $21.04 with above-average volume. This sharp trend to the upside on Friday also pushed shares of ASPX into breakout territory, since this stock took out some near-term overhead resistance levels at $22.98 to $24.67. This move is now quickly pushing shares of ASPX within range of triggering another big breakout trade. That trade will hit if ASPX manages to take out Friday's intraday high of $25.08 to some more key overhead resistance at $25.67 with high volume.

Traders should now look for long-biased trades in ASPX as long as it's trending above some key near-term support levels at $22 or above its 50-day at $21.04 and then once it sustains a move or close above those breakout levels with volume that hits near or above 138,759 shares. If that breakout hits soon, then ASPX will set up to re-test or possibly take out its next major overhead resistance levels at $33.09 to $35.78.

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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