In https://realmoney.thestreet.com/articles/10/28/2011/bolting-higher-heavy-volume late October, I wrote about the significance of heavy volume and institutional support as a stock rallies. Price gains in above-average trade often lead to further rallies, as hedge funds and mutual funds continue to pile into a stock.
SolarWinds has fared best, rocketing to all-time highs, but action on the other two remains bullish, as well. Cadence pulled back and got support at its 50-day moving average line, while Ceva has regained its 50-day and 200-day averages -- after falling below key trend lines in the late November market selloff.
While it may seem counterintuitive to applaud pullbacks from earlier highs, studies of past stock winners show that such action can be constructive, giving buyers with conviction a chance to buy into the company.
Because I'm always running scans of heavy-volume movers, I noted a few more names that stood out, even in the upside trade that lifted most equities in the past week.
Ulta Salon, Cosmetics & Fragrance (ULTA), a stock I have been tracking for quite some time, is approaching its all-time high of $75.69, reached on Nov. 7. As of mid-session Friday, upside volume was trending higher following better-than-expected fourth-quarter guidance late Thursday.
The company has amassed a solid track record of sales and earnings growth, and mutual funds and hedge funds have piled into the stock in recent quarters.
Ulta, which operates nearly 400 cosmetics and hair-care superstores in 40 states, is a mid-cap that went public in October, 2007. In a bull rally, young stocks like this often lead the charge higher, as do small- and mid-caps. The stock is currently in a technical buy range, although, in these volatile market conditions, you need to be aware that a widespread downdraft has potential to drag even good performers lower until a new rally gets under way.
Another heavy-volume price mover in recent days has been the little-known Altisource Portfolio Solutions (ASPS), a Luxembourg-based company that provides real estate and portfolio management services to institutional clients around the world. Its market cap is around $1.1 billion, and it moves only 87,000 shares a day on average.
The stock has advanced for six weeks in a row, rallying to new highs, so it is clearly out of buy range at the moment. Volume trends have been better than average. Fundamentally, the picture is bright, with analysts eyeing profit increases of 26% and 48% in the next two fiscal years. The thin Altisource trade means investors should use extra caution, but at this juncture, I'm watching for a pullback with moving-average support to signal the next possible entry point.
Finally, I'm also monitoring Hi-Tech Pharmacal (HITK), which is working on its fourth week in a row of price gains. Weekly volume was more than double average levels as the maker of generic and prescription drugs rallied to an all-time high.
While the technicals have been outstanding, the analyst estimates leave me a bit cautious. The company is expected to remain profitable, but Wall Street sees year-over-year earnings dropping slightly in 2012 and 2013.
The company is due to report first-quarter results on Monday, with Wall Street anticipating income of $0.77 a share on revenue of $51.4 million. That would be a year-over-year increase in revenue, but a decrease on the bottom line.
However, as we all see on a regular basis, analyst estimates can be wrong -- to the high or low side -- so this is a company I'm continuing to track for both technical and fundamental indications of strength.