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.
Carbonite
Carbonite (CARB) provides cloud backup solutions with access to files stored in its servers in the U.S. This stock closed up 4% at $10.75 in Friday's trading session.
Friday's Volume: 185,360
Three-Month Average Volume: 104,034
Volume % Change: 50%
From a technical perspective, CARB ripped higher here right off some near-term support at $10.25 with above-average volume. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $9.17 to its intraday high of $10.85. During that uptrend, shares of CARB have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of CARB within range of triggering a near-term breakout trade. That trade will hit if CARB manages to take out Friday's intraday high of $10.85 and then once it clears both its 50-day and 200-day moving average at $11.07 with high volume.
Traders should now look for long-biased trades in CARB as long as it's trending above some near-term support at $10.25 and then once it sustains a move or close above those breakout levels with volume that's near or above 104,034 shares. If that breakout hits soon, then CARB will set up to re-test or possibly take out its next major overhead resistance levels at $12.66 to $13.80.
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Magna International
Magna International (MGA) develops, manufactures, engineers, supplies and sells automotive products. This stock closed up 5.9% at $111.44 in Friday's trading session.
Friday's Volume: 1.06 million
Three-Month Average Volume: 452,925
Volume % Change: 146%
From a technical perspective, MGA ripped sharply higher here back above its 50-day moving average of $108.43 with strong upside volume flows. This strong move to the upside on Friday is quickly pushing shares of MGA within range of triggering a major breakout trade. That trade will hit if MGA manages to take out some key near-term overhead resistance levels at Friday's intraday high of $111.75 to its 52-week high at $112.20 with high volume.
Traders should now look for long-biased trades in MGA as long as it's trending above Friday's intraday low of $107 or above more near-term support at $105 and then once it sustains a move or close above those breakout levels with volume that's near or above 452,925 shares. If that breakout materializes soon, then MGA will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $120 to $125.
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Copa Holdings
Copa Holdings (CPA) provides airline passenger and cargo services in Latin America. This stock closed up 4.9% at $133.60 in Friday's trading session.
Friday's Volume: 1.39 million
Three-Month Average Volume: 356,648
Volume % Change: 283%
From a technical perspective, CPA ripped sharply higher here right above some near-term support at $126 with strong upside volume flows. This stock recently gapped down sharply from just over $150 to $126 with heavy downside volume flows. Following that move, shares of CPA have now started to rebound off that $126 low and it's quickly moving within range of triggering a major breakout trade. That trade will hit if CPA manages to take out Friday's intraday high of $133.71 and then once it clears its gap-down-day high of $135.65 with high volume.
Traders should now look for long-biased trades in CPA as long as it's trending above Friday's intraday low of $128.79 and then once it sustains a move or close above those breakout levels with volume that's near or above 356,648 shares. If that breakout begins soon, then CPA will set up to re-fill some of its previous gap-down-day zone that started just above $150.
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Sprouts Farmers Market
Sprouts Farmers Market (SFM) through its subsidiaries, is engaged in the retail of natural and organic food in the U.S. This stock closed up 3.6% at $31.67 in Friday's trading session.
Friday's Volume: 3.03 million
Three-Month Average Volume: 1.32 million
Volume % Change: 171%
From a technical perspective, SFM jumped notably higher here right off its 50-day moving average of $30.91 with above-average volume. This spike to the upside on Friday is quickly pushing shares of SFM within range of triggering a big breakout trade. That trade will hit if SFM manages to take out Friday's intraday high of $32.91 to some more near-term overhead resistance at $33.18 with high volume.
Traders should now look for long-biased trades in SFM as long as it's trending above Friday's intraday low of $30.79 or above more near-term support levels at $30 to $29.11 and then once it sustains a move or close above those breakout levels with volume that's near or above 1.32 million shares. If that breakout gets underway soon, then SFM will set up to re-test or possibly take out its next major overhead resistance levels at $35 to its 200-day moving average of $35.26, or even $36 to $38.
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.
Brian Jackson/Alamy If you want to know why corporations can thrive on their ability to trick consumers, I can explain it to you in four words: No material financial impact. Recently, 45 state attorneys general thought enough about complaints filed against satellite radio firm Sirius XM (SIRI) that they bothered to initiate legal action against the firm. Plenty of customers (myself included) complained that they were surprised by credit card charges from the firm, which engaged in the old automatic renewal game. When Sirius decided to settle, it paid some spare change. When asked by a consumer reporter (me) for a statement about the settlement, the firm was quick to stress how little it was. "We agreed to make a payment of approximately $4 million to the states that has no material financial effect on the company," the firm said in its statement. Yes, I know that's specific language intended for Wall Street. The payment won't affect earnings guidance, etc., etc. But how can an intelligent person also not read that as a thumb to the nose (being polite here) at 45 states' top legal authority? Sure, you came after us, and we paid, but it didn't hurt. Nah Nah Nah. You can't hurt me! How can it not feel like a Bronx cheer to you? Bad (Yet Familiar) Corporate Behavior A little more background about the allegations against Sirius: Here's what Ohio Attorney General Mike DeWine said consumers complained about when he announced the settlement: "Difficulty canceling contracts; cancellation requests that were not honored; misrepresentations that the consumer's Sirius XM service would be canceled and not renewed; contracts that were automatically renewed without consumers' notice or consent; unauthorized fees; higher, unanticipated rates after a low introductory rate; and Sirius XM failing to provide timely refunds." That list might sound bad, but I'll bet it also sounds awfully familiar. Plenty of companies make it incredibly easy to sign up and incredibly hard to stop paying them money. And why not? They know that their worst-case scenario is usually announcing a settlement that has no material impact. Sirius, by the way, agreed to a list of changes demanded by state attorneys general. It also agreed to compensate affected consumers, but they must ask for refunds by visiting this website. Here is the company's full statement about the settlement: "We are pleased to have reached agreements that resolve this investigation. The changes to our consumer practices that we agreed to are practices we have already implemented at SiriusXM. Under the terms of the settlements, we have agreed to provide, upon the request of the states, additional information about our consumer practices and to participate in a process designed to address any previously unresolved consumer complaints. In addition, we agreed to make a payment of approximately $4 million to the states that has no material financial effect on the company." We No Longer Have a Free Market But here's the point: Companies routinely invent bad business practices, inflict them on consumers, get caught, use the legal system to delay, eventually admit guilt without admitting guilt, and make a token payment that's considered the cost of doing business. This is why we don't have a free market anymore. We have a lawless economy that I call Gotcha Capitalism, and I've written a book about this. Free markets require perfect information on all sides of a transaction. They require clear price tags. In Gotcha Capitalism, we have little idea what things cost. Maybe they cost $10 a month, until they cost $25 a month at some point in the future. Or maybe $35. Who knows? If I'm a company, I don't want intelligent consumers who appreciate the value of the product they get. I want suckers who are too busy to check their credit card bills and too worn down to file official complaints, which is the only way you'll get a refund from Sirius. Sure, this is annoying. But it's more than that. Gotcha Capitalism rewards bad behavior. It turns the normal reward function of capitalism on its head. Instead of good companies with good products and creative innovation rising to the top, we have companies that refine their gotcha mechanisms rising to the top. They create just enough surprise to walk the thin line of the law -- or slip over it, but not enough to do something that might have a material impact on the bottom line. But for now, know this: Until bad behavior starts resulting in material impact, companies won't stop. And we'll remain stuck in the sucker economy.