5 Stocks Breaking Out on Big Volume

DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds dont 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.

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.

With that in mind, let's take a look at several stocks rising on unusual volume recently. 

Texura (TXTR)

This company provides on-demand business collaboration software solutions to the commercial construction industry. This stock closed up 1.7% to $30.06 in Monday's trading session. 

Monday's Volume: 1.78 million

Three-Month Average Volume: 427,662

Volume % Change: 393%

From a technical perspective, TXTR spiked modestly higher here right above its recent low of $28.50 with heavy upside volume. This stock has been downtrending over the last few weeks, with shares falling from its high of $41.50 to its low of $28.50. During that downtrend, shares of TXTR have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of TXTR are now coming off that low of $28.50 with volume. That move is quickly pushing shares of TXTR within range of triggering a near-term breakout trade.

That trade will hit if TXTR manages to take out Monday's high of $30.37 to some near-term overhead resistance at $31 with high volume. Traders should now look for long-biased trades in TXTR as long as it's trending above that recent low of $28.50, and then once it sustains a move or close above those breakout levels with volume that hits near or above 427,662 shares. If that breakout hits soon, then TXTR will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $36.63. 

Cooper Tire & Rubber (CTB)

This company produces and markets passenger, light truck, medium truck, motorsport and motorcycle tires which are sold nationally and internationally in the replacement tire market. This stock closed up 5.4% to $24.20 in Monday's trading session.

Monday's Volume: 6.54 million

Three-Month Average Volume: 1.85 million

Volume % Change: 289%

From a technical perspective, CTB spiked sharply higher here back above its 50-day moving average of $24.03 with heavy upside volume. This move is quickly pushing shares of CTB within range of triggering a near-term breakout trade. That trade will hit if CTB manages to take out Monday's high of $24.44 to some near-term overhead resistance at $24.83 with high volume. 

Traders should now look for long-biased trades in CTB as long as it's trending above $23 or Monday's low of $22.08, and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.85 million shares.

If that breakout hits soon, then CTB will set up to re-test or possibly take out its next major overhead resistance levels at $27.37 to its 200-day at $27.70. Any high-volume move above those levels will then give CTB a chance to re-fill its previous gap zone from October that started near $31. 

CVD Equipment (CVV)

This company designs, develops & manufactures customized state-of-the-art equipment and process solutions used to develop & manufacture solar, nano & advanced electronic components, materials & coatings for research & industrial applications. This stock closed up 6.3% at $14.61 in Monday's trading session. 

Monday's Volume: 181,000

Three-Month Average Volume: 46,265

Volume % Change: 154%

From a technical perspective, CVV ripped sharply higher here and broke out above some near-term overhead resistance at $14.14 with above-average volume. This move is quickly pushing shares of CVV within range of triggering another big breakout trade. That trade will hit if CVV manages to take out Monday's high of $14.76 to its 52-week high at $14.80 with high volume.

Traders should now look for long-biased trades in CVV as long as it's trending above Monday's low of $13.68 or above $13, and then once it sustains a move or close above those breakout levels with volume that hits near or above 46,265 shares. If that breakout triggers soon, then CVV will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets off that breakout are its next major overhead resistance levels at $16.06 to $17.95. Any high-volume move above those levels will then give CVV a chance to tag $20.   

CONMED (CNMD)

This is a medical technology company with an emphasis on surgical devices and equipment for minimally invasive procedures and monitoring. This stock closed up 1.4% to $42.48 in Monday's trading session.

Monday's Volume: 284,000

Three-Month Average Volume: 110,694

Volume % Change: 138% 

From a technical perspective, CNMD spiked modestly higher here right above some near-term support at $41.62 with above-average volume. This stock has been uptrending strong for the last four months, with shares soaring higher from its low of $30.56 to its recent high of $45.57. During that uptrend, shares of CNMD have been consistently making higher lows and higher highs, which is bullish technical price action. 

Traders should now look for long-biased trades in CNMD as long as it's trending above some near-term support at $41.62 or above more support at $39, and then once it sustains a move or close above Monday's high of $42.50 with volume that hits near or above 110,694 shares. If we get that move soon, then CNMD will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $45.57. Any high-volume move above $45.57 will then give CNMD a chance to tag $50. 

Fuel Systems Solutions (FSYS)

This company designs, manufactures and supplies alternative fuel components and systems for transportation and industrial applications. This stock closed up 3.9% at $13.46 in Monday's trading session. 

Monday's Volume: 476,000

Three-Month Average Volume: 178,754

Volume % Change: 137%

From a technical perspective, FSYS spiked notably higher here with above-average volume. This stock recently formed a double bottom chart pattern, after shares found buying interest at $12.25 to $12.26. Following that bottom, shares of FSYS have now started to uptrend and move within range of triggering a big breakout trade.

That trade will hit if FSYS can manage to take out some near-term overhead resistance levels at $13.90 to $14.01, and then once it clears its 50-day moving average at $14.54 with high volume.  Traders should now look for long-biased trades in FSYS as long as it's trending above Monday's low of $12.81 or above more support at $12.25, and then once it sustains a move or close above those breakout levels with volume that this near or above 178,754 shares. If that breakout hits soon, then FSYS will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $16.82 to $18, or
even $19.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS: >>5 Stocks Breaking Out on Big Volume >>5 Dividend Stocks Ready to Pay You More in 2014 >>5 Big Trades for Post-Taper Gains

 

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Fed cuts QE pace to $75B on labor market outlook

It starts: Fed chairman Ben S. Bernanke has started the taper. Bloomberg News

The Federal Reserve is cutting its monthly bond purchases to $75 billion from $85 billion, taking the first step toward unwinding the unprecedented stimulus that Chairman Ben S. Bernanke put in place to help the economy recover from the worst recession since the 1930s.

“In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the committee decided to modestly reduce the pace of its asset purchases,” the Federal Open Market Committee said Wednesday at the conclusion of a two-day meeting in Washington. The Fed's purchases will be divided between $40 billion in Treasuries and $35 billion in mortgage bonds starting in January.

Mr. Bernanke, in the final weeks of his eight-year tenure, is curtailing the purchases that swelled the Fed’s balance sheet almost to $4 trillion as he sought to put millions of jobless Americans back to work. The policy, supported by his designated successor, Vice Chairman Janet Yellen, stirred concern it risks inflating asset-price bubbles even as its economic benefits ebbed.

“If incoming information broadly supports the committee’s expectation of ongoing improvement in labor-market conditions and inflation moving back toward its longer-run objective, the committee will likely reduce the pace of asset purchases in further measured steps.” The committee repeated that purchases are “not on a preset course.”

Treasuries fell after the decision, pushing the yield on the 10-year note to 2.9% from 2.84% late Tuesday. Stocks extended gains.

TARGET RATE

The central bank left unchanged its statement that it will probably hold its target interest rate near zero “at least as long as” unemployment exceeds 6.5%, so long as the outlook for inflation is no higher than 2.5%.

The panel added that it “likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6.5%, especially if projected inflation continues to run below” the Fed’s 2% goal.

Price gains have lagged below the committee’s long-run target. The central bank’s preferred gauge of inflation, excluding food and energy, climbed 1.1% in the year through October. It has not breached 2% since March 2012.

Boston Fed President Eric Rosengren dissented, saying that changes on the bond-purchase program were “premature until incoming data more clearly indicate that economic growth is likely to be sustained above its potential rate.”

Policy makers met amid signs the economy and labor market were gaining strength, even as inflation remained subdued.

JOB MARKET

The jobless rate fell to 7% in November, a five-year low, as employers added a greater-than-forecast 203,000 workers to payrolls. Unemployment was down from 10% in October 2009, during the recession, and up from 4.4% in May 2007.

Retail sales climbed by the most in five months in November, a sign that consumer spending was strengthening as the holiday season began. Industrial production last mo! nth increased by the most in a year, a Fed report showed this week.

Companies including Ford Motor Co. are benefiting from rising demand for new cars. Ford said this month it plans to add 5,000 jobs in the U.S. and will introduce 16 new vehicles in North America next year. The payroll expansion will continue following the hiring of almost 6,500 people in 2013.

Stocks have surged on stronger corporate earnings and continued Fed stimulus. The Standard & Poor’s 500 Index closed at a record 1,808.37 on Dec. 9 and was up 25% for the year as of Tuesday.

The Fed’s low interest rates have prompted consumers to buy homes or refinance existing mortgages, sparking a recovery in the housing market that was at the center of the financial crisis.

Housing prices climbed 13.3% in the 12 months through September, according to an S&P/Case-Shiller index of prices in 20 cities. The pace of home construction reached a more than five-year high in November as builders added to inventory to keep pace with demand, a report Wednesday from the Commerce Department showed.

Rising stocks and home values are boosting household wealth, giving consumers the wherewithal to keep spending. Many have invested in improvements to their homes, lifting profits at companies such as Home Depot Inc., the largest U.S. home-improvement retailer.

FALSE STARTS

“This is one of the stronger-looking points of the recovery,” said Alan MacEachin, corporate economist at Navy Federal Credit Union. “We’ve had a couple of false starts, but now you’ve got the cumulative effects of an improving job market, coupled with the wealth effect from record stock levels.”

Yet with inflation so low, the economy could be at risk of deflation were growth to slip, he said. “One of the Fed’s biggest fears right now is if the economy were to slow significantly, that’s going to put more downward pressure on inflation.”

Growth so far has lagged behind previous recoveries. In the 17 qua! rters sin! ce the recession ended, the economy has expanded at an average annualized rate of 2.3% each quarter. That compares with an average of 3.2% over the same period following the 2001 and 1991 recessions, and 5% following the 1982 recession.

Gross domestic product will expand 2.6% next year after gaining 1.7% in 2013, according to the median forecast of economists surveyed by Bloomberg from Dec. 6 to Dec. 11.

Economists were divided on whether the FOMC would begin tapering bond purchases Wednesday. Thirty-four percent of economists in a Dec. 6 Bloomberg survey said the Fed would act at today’s meeting. Twenty-six percent predicted a January taper and 40% said March.

The Fed’s debate over when to taper purchases has dominated central banking discussions for much of the year, setting off waves of volatility in financial markets. In May, Mr. Bernanke told Congress that the Fed may slow its purchases during the “next few meetings.”

The yield on the 10-year Treasury climbed to as high as 3% in September from as low as 1.61% in May, as investors anticipated a reduction in Fed stimulus. The national average 30-year fixed-rate mortgage climbed to 4.58% in late August from 3.35% in May, according to Freddie Mac.

“As soon as they started talking about tapering, they raised interest rates,” said Julia Coronado, chief economist for North America at BNP Paribas in New York and a former Fed economist.

SEPTEMBER MEETING

Before the September FOMC meeting, the majority of economists in a Bloomberg survey expected the Fed to begin reducing purchases. The committee surprised mark