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.
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.
Houghton Mifflin Harcourt Company (HMHC - Get Report) provides education solutions for educational institutions and consumers worldwide. This stock closed up 5.5% at $19.50 in Monday's trading session.
Monday's Volume: 1.28 million
Three-Month Average Volume: 315,916
Volume % Change: 308%
From a technical perspective, HMHC ripped sharply higher here and broke out above some near-term overhead resistance levels at $18.77 to $18.87 with strong upside volume. This move also pushed shares of HMHC back above its 50-day moving average of $19.40. Market players should now look for a continuation move to the upside in the short-term if HMHC manages to clear Monday's intraday high of $19.67 with strong upside volume.
Traders should now look for long-biased trades in HMHC as long as it's trending above $18.77 or above Monday's low of $18.30 and then once it sustains a move or close above $19.67 with volume that's near or above 315,916 shares. If that move gets underway soon, then HMHC will set up to re-test or possibly take out its next major overhead resistance level at its all-time high of $21. Any high-volume move above $21 will then give HMHC a chance to make a run at $25.