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.
Lincoln Electric (LECO - Get Report), through its subsidiaries, engages in the design, manufacture and sale of welding, cutting and brazing products worldwide. This stock closed up 4.9% to $70.05 in Monday's trading session.
Monday's Volume: 1.08 million
Three-Month Average Volume: 369,962
Volume % Change: 238%
From a technical perspective, LECO gapped up sharply higher here back above both its 50-day moving average at $67.68 and its 200-day moving average of $69.40 with strong upside volume flows. This powerful gap higher on Monday is quickly pushing shares of LECO within range of triggering a big breakout trade. That trade will hit if LECO manages to take out some key near-term overhead resistance levels at $70.81 to $71.23 with high volume.
Traders should now look for long-biased trades in LECO as long as it's trending above Monday's intraday low of $68.46 or above its 50-day at $67.68 and then once it sustains a move or close above those breakout levels with volume that hits near or above 369,962 shares. If that breakout begins soon, then LECO will set up to re-test or possibly take out its next major overhead resistance levels at $73 to its 52-week high at $76.26.