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.
Dicerna Pharmaceuticals (DRNA), a biopharmaceutical company, focuses on the discovery and development of treatments for liver diseases and cancers based on a proprietary RNA interference technology platform in the U.S. and internationally. This stock closed up 2.4% to $15.26 in Friday's trading session.
Friday's Volume: 350,000
Three-Month Average Volume: 157,630
Volume % Change: 100%
From a technical perspective, DRNA bounced notably higher here right off its new 52-week low at $14.36 with above-average volume. This stock has been downtrending badly for the last month, with shares moving lower from its high of $23.39 to its 52-week low of $14.36. During that downtrend, shares of DRNA have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of DRNA have now started to bounce higher off its 52-week low with volume and it's quickly moving within range of triggering a near-term breakout trade. That trade will hit if DRNA manages to take out Friday's intraday high of $15.42 to more resistance at $16.91 and then above its 50-day moving average of $17.56 with high volume.
Traders should now look for long-biased trades in DRNA as long as it's trending above its 52-week low of $14.36 and then once it sustains a move or close above those breakout levels with volume that hits near or above 157,630 shares. If that breakout hits soon, then DRNA will set up to re-test or possibly take out its next major overhead resistance levels at $19.68 to around $21.