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3 Stocks Breaking Out on Unusual 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.

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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 recently. (WUBA - Get Report) operates online marketplace for local merchants and consumers in the People's Republic of China. This stock closed up 8.2% at $47.03 in Wednesday's trading session.

Wednesday's Volume: 1.97 million
Three-Month Average Volume: 1.12 million
Volume % Change: 63%

From a technical perspective, WUBA spiked sharply higher here right off its 50-day moving average of $43.03 with above-average volume. This stock recently formed a double bottom chart pattern at $36.86 to $36.16. Following that bottom, shares of WUBA have started to spike sharply higher back above its 50-day and into breakout territory above some near-term overhead resistance at $47. Market players should now look for a continuation move higher in the short-term if WUBA can manage to take out Wednesday's high of $48 with strong volume.

Traders should now look for long-biased trades in WUBA as long as it's trending above $45 or above its 50-day at $43.03 and then once it sustains a move or close above $48 with volume that this near or above 1.12 million shares. If that breakout starts soon, then WUBA will set up to re-test or possibly take out its next major overhead resistance levels at $50 to $52.50.

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