Sunday, July 27, 2014

4 Biotech Stocks Breaking Out on Big Volume

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.
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.
Ligand Pharmaceuticals , a biotechnology company, acquires and develops royalty revenue generating assets in the U.S. This stock closed up 5.1% at $51.65 in Wednesday's trading session.
Wednesday's Volume: 588,000
Three-Month Average Volume: 301,981
Volume % Change: 90%
From a technical perspective, LGND ripped higher here right above some near-term support at $48.67 with above-average volume. This stock has been downtrending badly for the last few weeks, with shares moving lower from its high of $65.66 to its recent low of $48.67. During that move, shares of LGND have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of LGND are now starting to rebound higher off that $48.67 low and it's quickly moving within range of triggering a near-term breakout trade. That trade will hit if LGND manages to take out Wednesday's intraday high of $52.07 to just above $54 with high volume.
Traders should now look for long-biased trades in LGND as long as it's trending above Wednesday's low of $49.31 or above that recent low of $48.67 and then once it sustains a move or close above those breakout levels with volume that's near or above 301,981 shares. If that breakout triggers soon, then LGND will set up to re-test or possibly take out its next major overhead resistance levels at $57.50 to its 200-day moving average of $61.30.
La Jolla Pharmaceuticals , a biopharmaceutical company, focuses on the discovery, development and commercialization of therapeutics for chronic organ failure and cancer. This stock closed up 4.6% to $11.46 in Wednesday's trading session.
Wednesday's Volume: 1.37 million
Three-Month Average Volume: 156,419
Volume % Change: 760%
From a technical perspective, LJPC jumped higher here right above some near-term support at $10.30 with monster upside volume. This spike higher on Wednesday is starting to push shares of LJPC within range of triggering a near-term breakout trade. That trade will hit if LJPC manages to take out Wednesday's intraday high of $11.60 to some more near-term resistance at $11.70 with high volume.
Traders should now look for long-biased trades in LJPC as long as it's trending above support at $10.30 and then once it sustains a move or close above those breakout levels with volume that hits near or above 156,419 shares. If that breakout this soon, then LJPC will set up to re-test or possibly take out its next major overhead resistance levels at $13.50 to $14.
OncoMed Pharmaceuticals , a clinical development-stage biotechnology company, focuses on discovering and developing monoclonal antibody therapeutics targeting cancer stem cells. This stock closed up 9.9% at $24.14 in Wednesday's trading session.
Wednesday's Volume: 238,000
Three-Month Average Volume: 153,697
Volume % Change: 75%
From a technical perspective, OMED soared sharply higher here back above its 50-day moving average of $22.87 with above-average volume. This large move to the upside on Wednesday is quickly pushing shares of OMED within range of triggering a near-term breakout trade. That trade will hit if OMED manages to take out some key near-term overhead resistance levels at $24.79 to its 200-day moving average of $25.35 and then above $26 with high volume.
Traders should now look for long-biased trades in OMED as long as it's trending above its 50-day moving average of $22.87 or above Wednesday's intraday low of $21.76 and then once it sustains a move or close above those breakout levels with volume that this near or above 153,697 shares. If that breakout materializes soon, then OMED will set up to re-test or possibly take out its next major overhead resistance levels at $28 to $29, or even $32.
AcelRx Pharmaceuticals , a development stage specialty pharmaceutical company, focuses on the development and commercialization of therapies for the treatment of acute and breakthrough pain. This stock closed up 6.7% to $10.63 in Wednesday's trading session.
Wednesday's Volume: 1.84 million
Three-Month Average Volume: 645,836
Volume % Change: 164%
From a technical perspective, ACRX ripped higher here right off its 200-day moving average of $10.17 and right above its 50-day moving average of $9.79 with above-average volume. This sharp spike higher on Wednesday is starting to push shares of ACRX within range of triggering a big breakout trade. That trade will hit if ACRX manages to take out Wednesday's intraday high of $11 to some more key overhead resistance levels at $11.65 to $11.89 with high volume.
Traders should now look for long-biased trades in ACRX as long as it's trending above its 50-day moving average of $9.79 and then once it sustains a move or close above those breakout levels with volume that hits near or above 645,836 shares. If that breakout starts soon, then ACRX will set up to re-test or possibly take out its next major overhead resistance levels at $12.50 to $13.40, or even its 52-week high at $13.64.
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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