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.
Dana Holding (DAN) engages in the design, manufacture and supply of driveline products, technologies and service parts for vehicle manufacturers worldwide. This stock is trading up 5.8% at $19.94 in Tuesday's trading session.
Tuesday's Volume: 5.91 million
Three-Month Average Volume: 2.78 million
Volume % Change: 354%
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From a technical perspective, DAN is ripping higher here back above both its 50-day moving average at $19.32 and its 200-day moving average at $19.82 with heavy upside volume. This move is quickly pushing shares of DAN within range of triggering a major breakout trade. That trade will hit if DAN manages to take out some near-term overhead resistance levels at $20.35 to $20.50 and then once it clears its gap-down day high from last October at $21 with high volume.
Traders should now look for long-biased trades in DAN as long as it's trending above Tuesday's low of $19.15 or above some more near-term support at $18.78 and then once it sustains a move or close above those breakout levels with volume that's near or above 2.78 million shares. If that breakout triggers soon, then DAN will set up to re-fill some of its previous gap-down-day zone that started near $23.
Nxstage Medical (NXTM), a medical device company, develops, manufactures, and markets products for the treatment of kidney failure, fluid overload, and related blood treatments and procedures. This stock is trading up 8.4% at $12.26 in Tuesday's trading session.
Tuesday's Volume: 1.02 million
Three-Month Average Volume: 543,708
Volume % Change: 201%
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From a technical perspective, NXTM is soaring higher here with above-average volume. This stock has been uptrending strong over the last month and change, with shares moving higher from its low of $8.77 to its intraday high of $12.40. During that uptrend, shares of NXTM have been making mostly higher lows and higher highs, which is bullish technical price action.
Traders should now look for long-biased trades in NXTM as long as it's trending above Tuesday's low of $11.55 and then once it sustains a move or close above its 200-day moving average of $12.30 with volume that's near or above 543,708 shares. If we get that move soon, then NXTM will set up to re-test or possibly take out its next major overhead resistance levels at $13.50 to $14. Any high-volume move above those levels will then give NXTM a chance to tag its 52-week high at $14.64 to $16.
SodaStream International (SODA) engages in the development, manufacture, and sale of home beverage carbonation systems that enable consumers to transform ordinary tap water instantly into carbonated soft drinks and sparkling water. This stock is trading up 2.5% at $37.89 in Tuesday's trading session.
Tuesday's Volume: 3.36 million
Three-Month Average Volume: 1.07 million
Volume % Change: 462%
From a technical perspective, SODA is trending higher here with heavy upside volume. This stock recently gapped down sharply from over $50 to under $37 with monster downside volume. That gap lower pushed shares of SODA into oversold territory, since its current relative strength index reading is 23.32. Oversold can always get more oversold, but it's also an area where a stock can experience a powerful rebound higher from.
Traders should now look for long-biased trades in SODA as long as it's trending above Tuesday's low of $36.38 and then once it sustains a move or close above Tuesday's high of $38.14 with volume that's near or above 1.07 million shares. If we get that move soon, then SODA will set up to rebound sharply higher off oversold conditions and potentially tag $42.50 to $45.
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 includingCNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.