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.
Kandi Technologies Group (KNDI - Get Report), through its subsidiaries, designs, develops, manufactures and commercializes various vehicles. This stock closed up 5.6% at $19.12 in Wednesday's trading session.
Wednesday's Volume: 5.58 million
Three-Month Average Volume: 1.86 million
Volume % Change: 202%
From a technical perspective, KNDI ripped sharply higher here with heavy upside volume. This stock has been uptrending strong for the last month and change, with shares moving higher from its low of $10.85 to its recent high of $19.92. During that uptrend, shares of KNDI have been consistently making higher lows and higher highs, which is bullish technical price action. This spike higher on Wednesday is starting to push shares of KNDI within range of triggering a near-term breakout trade. That trade will hit if KNDI manages to take out Wednesday's intraday high of $19.44 to some more key overhead resistance at $19.92 with high volume.
Traders should now look for long-biased trades in KNDI as long as it's trending above Wednesday's intraday low of $17.64 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.86 million shares. If that breakout hits soon, then KNDI will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high at $22.40.