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.
Anacor Pharmaceuticals (ANAC - Get Report), a biopharmaceutical company, focuses on discovering, developing and commercializing novel small-molecule therapeutics derived from its boron chemistry platform. This stock closed up 6.6% to $16.90 in Monday's trading session.
Monday's Volume: 2.22 million
Three-Month Average Volume: 425,667
Volume % Change: 412%
From a technical perspective, ANAC gapped sharply higher here back above both its 50-day moving average of $15.97 and its 200-day moving average of $16.50 with monster upside volume. This stock recently formed a double bottom chart pattern at $14.95 to $15.11. Since tagging that bottom, shares of ANAC have started to rip higher and move within range of triggering a big breakout trade. That trade will hit if ANAC manages to take out Monday's intraday high of $17.03 to $17.62 and then once it clears more near-term overhead resistance at $18.73 with high volume.
Traders should now look for long-biased trades in ANAC as long as it's trending above Monday's intraday low of $16.15 and then once it sustains a move or close above those breakout levels with volume that hits near or above 425,667 shares. If that breakout kicks off soon, then ANAC will set up to re-test or possibly take out its next major overhead resistance levels at $21.27 to $23.07.