4 Tech 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.

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.

Lumos Networks

Lumos Networks (LMOS) through its subsidiaries, provides fiber-based bandwidth infrastructure and service in the Mid-Atlantic region. This stock closed up 7.4% to $15.35 in Monday's trading session.

Monday's Volume: 635,000
Three-Month Average Volume: 90,516
Volume % Change: 668%

From a technical perspective, LMOS ripped sharply higher here right off some near-term support at $14 and back above both its 50-day moving average of $14.73 and its 200-day moving average of $15.35 with monster upside volume flows. This sharp move to the upside on Monday is quickly pushing shares of LMOS within range of triggering a big breakout trade. That trade will hit if LMOS manages to take out Monday's intraday high of $15.55 to some more key overhead resistance at $15.75 with high volume.

Traders should now look for long-biased trades in LMOS as long as it's trending above $14 and then once it sustains a move or close above those breakout levels with volume that hits near or above 90,516 shares. If that breakout triggers soon, then LMOS will set up to re-test or possibly take out its next major overhead resistance levels at $18 to $19, or even $20.

Arista Networks

Arista Networks (ANET) provides cloud networking solutions for datacenter and cloud computing environments. This stock closed up 9.6% at $93.31 in Monday's trading session.

Monday's Volume: 762,000
Three-Month Average Volume: 356,898
Volume % Change: 175%

From a technical perspective, ANET exploded higher here right above some near-term support at $83.06 with strong upside volume flows. This stock recently formed a double bottom chart pattern at $83.14 to $83.06. Following that bottom, shares of ANET have now started to rip sharply higher and break out above some near-term overhead resistance levels at $88.65 to $90.89. That move is now quickly pushing shares of ANET within range of triggering another major breakout trade. That trade will hit if ANET manages to take out its all-time high at $93.94 with high volume.

Traders should now look for long-biased trades in ANET as long as it's trending above $90.89 or above $88.65 and then once it sustains a move or close above $93.94 with volume that's near or above 356,898 shares. If that breakout hits soon, then ANET will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $100 to $110.

2U

2U (TWOU) provides cloud-based software-as-a-service solutions for nonprofit colleges and universities to deliver education to qualified students. This stock closed up 4.6% at $15.62 in Monday's trading session.

Monday's Volume: 281,000
Three-Month Average Volume: 170,972
Volume % Change: 65%

From a technical perspective, TWOU ripped notably higher here right above some near-term support at $14.67 with above-average volume. This stock has been downtrending badly for the last month and change, with shares dropping sharply lower from its high of $20.20 to its recent low of $14.67. During that downtrend, shares of TWOU have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of TWOU have now started to bounce higher off that $14.67 low and it's starting to move within range of triggering a near-term breakout trade. That trade will hit if TWOU manages to take out its 50-day moving average of $16.19 to some more near-term overhead resistance at $16.51 with high volume. If this breakout triggers soon, it could signal that TWOU is preparing for a trend reversal that could send shares spiking higher.

Traders should now look for long-biased trades in TWOU as long as it's trending above some key near-term support at $14.67 and then once it sustains a move or close above those breakout levels with volume that hits near or above 170,972 shares. If that breakout materializes soon, then TWOU will set up to re-test or possibly take out its next major overhead resistance levels at $18 to $19, or even its 52-week high at $20.20.

Informatica

Informatica (INFA) provides data integration software and services worldwide. This stock closed up 5.5% at $33.72 in Monday's trading session.

Monday's Volume: 3.22 million
Three-Month Average Volume: 1.42 million
Volume % Change: 185%

From a technical perspective, INFA ripped sharply higher here right above some near-term support at $31.45 and back above its 50-day moving average of $32.88 with strong upside volume flows. This strong trend to the upside on Monday is now quickly pushing shares of INFA within range of triggering a major breakout trade. That trade will hit if INFA manages to take out some key near-term overhead resistance levels at $34.31 to $34.89 and then once it clears more resistance at $35.07 with high volume.

Traders should now look for long-biased trades in INFA as long as it's trending above its 50-day at $32.88 or above Monday's intraday low of $31.83 and then once it sustains a move or close above those breakout levels with volume that's near or above 1.42 million shares. If that breakout kicks off soon, then INFA will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $37 to $37.72, or even $39.

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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