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.
Energy Transfer Equity
Energy Transfer Equity (ETE), through its subsidiaries, provides diversified energy-related services in the U.S. This stock closed up 2.2% at $41.16 in Friday's trading session.
Friday's Volume: 7.22 million
Three-Month Average Volume: 1.67 million
Volume % Change: 346%
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From a technical perspective, ETE bounced notably higher here right off its 50-day moving average of $39.71 with heavy upside volume. This stock has been trending sideways and consolidating for the last month and change, with shares moving between $38.66 on the downside and $42.74 on the upside. Shares of ETE are now starting to move within range of triggering a big breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if ETE manages to take out some near-term overhead resistance levels at $41.95 to its 52-week high at $43.11 with high volume.
Traders should now look for long-biased trades in ETE as long as it's trending above its 50-day at $39.71 or above more near-term support at $38.66 and then once it sustains a move or close above those breakout levels with volume that this near or above 1.67 million shares. If that breakout hits soon, then ETE will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $50 to $55.
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Diamondback Energy
Diamondback Energy (FANG), together with its subsidiaries, focuses on the acquisition, development, exploration and exploitation of onshore oil and natural gas reserves in the Permian Basin in West Texas. This stock closed up 5.4% at $56.72 in Friday's trading session.
Friday's Volume: 1.29 million
Three-Month Average Volume: 774,797
Volume % Change: 175%
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From a technical perspective, FANG ripped higher here with above-average volume. This move briefly pushed shares of FANG into new all-time-high territory, since the stock took out some previous overhead resistance at $58.71. Shares of FANG hit an intraday high of $59 before closing well off that level at $56.72. Market players should now look for a continuation move higher in the short-term if FANG manages to take out its new all-time high at $59 with strong volume.
Traders should now look for long-biased trades in FANG as long as it's trending above Friday's low of $55.01 or above $54 and then once it sustains a move or close above $59 with volume that's near or above 774,797 shares. If we get that move soon, then FANG will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $65 to $70.
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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