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.
Ultragenyx Pharmaceuticals (RARE), a development-stage biotechnology company, focuses on the identification, acquisition, development and commercialization of various products for the treatment of rare and ultra-rare diseases in the U.S. This stock closed up 7.8% at $43 in Friday's trading session.
Friday's Volume: 674,000
Three-Month Average Volume: 201,471
Volume % Change: 242%
From a technical perspective, RARE ripped sharply higher here right above some key near-term support levels at $39.21 to $37.77 with strong upside volume. This sharp spike higher on Friday is quickly pushing shares of RARE within range of triggering a major breakout trade. That trade will hit if RARE manages to take out Friday's intraday high of $43.44 to some more key overhead resistance levels at $44.59 to $46 with high volume.
Traders should now look for long-biased trades in RARE as long as it's trending above some key near-term support at $39.21 and then once it sustains a move or close above those breakout levels with volume that hits near or above 201,471 shares. If that breakout materializes soon, then RARE will set up to re-test or possibly take out its next major overhead resistance levels $50.91 to $50.93. Any high-volume move above those levels will then give RARE a chance to tag $60.