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 today.
Eli Lilly (LLY) is a drug manufacturing company. This stock closed up 1.1% to $54.18 in Friday's trading session.
Friday's Volume: 14.71 million
Three-Month Average Volume: 5.45 million
Volume % Change: 191%
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From a technical perspective, LLY trended up modestly here right above some near-term support at $53 with heavy upside volume. This stock has been uptrending strong for the last month and change, with shares moving higher from its low of $46.68 to its recent high of $54.45. During that uptrend, shares of LLY have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of LLY within range of triggering a near-term breakout trade. That trade will hit if LLY manages to take out some near-term overhead resistance at $54.45 with high volume.
Traders should now look for long-biased trades in LLY as long as it's trending above $53 or above its 200-day at $52.08 and then once it sustains a move or close above $54.45 with volume that hits near or above 5.45 million shares. If that breakout hits soon, then LLY will set up to re-test or possibly take out its next major overhead resistance levels at $57.10 to $57.90.
Nektar Therapeutics (NKTR) is a clinical-stage biopharmaceutical company developing a pipeline of drug candidates that utilize its PEGylation and polymer conjugate technology platforms, which are designed to improve the benefits of drugs for patients. This stock closed up 13.4% at $12.41 in Friday's trading session.
Friday's Volume: 3.59 million
Three-Month Average Volume: 1.11 million
Volume % Change: 248%
Shares of NKTR soared higher on Friday after its quarterly results topped Wall Street expectations.
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From a technical perspective, NKTR ripped sharply higher here right off its 50-day moving average of $11.21 with strong upside volume flows. This move is quickly pushing shares of NKTR within range of triggering a near-term breakout trade. That trade will hit if NKTR manages to take out some near-term overhead resistance levels at $12.91 to its 52-week high at $12.95 with high volume.
Traders should now look for long-biased trades in NKTR as long as it's trending above its 50-day at $11.21 and then once it sustains a move or close above those breakout levels with volume that's near or above 1.11 million shares. If that breakout hits soon, then NKTR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $15 to $17.
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.