By: Roberto Pedone
Professional traders running mutual funds and hedge funds don’t just look at a stock’s price moves, they 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.”
Stocks with unusual volume are something that I tweet about on a daily basis. These are also the exact type of stocks that I love to trade and alert in real time.
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.
Varonis Systems (VRNS – Get Report) provides software platform for enterprises to analyze, secure, manage, and utilize their unstructured data. This stock closed up 1.9% to $31 in Tuesday’s trading session.
- Tuesday’s Volume: 672,000
- Three-Month Average Volume: 282,148
- Volume % Change: 161%
From a technical perspective, Varonis Systems spiked modestly higher on Tuesday and broke out above some near-term overhead resistance at around $30.50 a share with strong upside volume. This stock has been uptrending over the last month and change, with shares moving higher off its low of $24.75 a share to its intraday high on Tuesday of $31.15 a share. During that uptrend, shares of Varonis Systems has been making mostly higher lows and higher highs, which is bullish technical price action. This jump to the upside is now quickly pushing this stock within range of triggering another near-term breakout trade. That trade will trigger if this stock manages to take out some key overhead resistance levels at $31.50 to its 52-week high of $32.05 a share with high volume.
Traders should now look for long-biased trades in Varonis Systems as long as it’s trending above some near-term support at $30 or at its 20-day moving average of $29.38 a share and then once it sustains a move or close above those breakout levels with volume that registers near or above 282,148 shares. If that breakout fires off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $35 to $38.50 a share.