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Professional traders that run mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Many times when above average volume moves into 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.
Allot CommunicationsAllot Communications(ALLT) is a provider of Internet protocol service optimization solutions for mobile, digital subscriber line and wireless broadband carriers, cable operator service providers and enterprises. The stock is trading up 5.2% at $15.30 in recent trading.
Today's Volume: 2,510,000
Average Volume: 272,361
Volume % Change: 2511%
This stock is popping today after the company announced that it had priced its ordinary share offering of 5.5 million shares at $14.25 per share.
technical standpoint, this stock is very close to triggering a breakout if it can manage to trade above some near-term
overhead resistance at $15.68. A high-volume move above that level could set this stock up to re-test its July highs of $19.15.
Some of the big volume today is due to that offering, so I would watch how the volume tracks in following today if the stock does breakout.
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