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.
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Esperion Therapeutics (ESPR), a clinical stage biopharmaceutical company, focuses on the research, development and commercialization of oral, low-density lipoprotein cholesterol lowering therapies for the treatment of patients with hypercholesterolemia and other cardiometabolic risk markers. This stock closed up 4.9% at $14.96 in Wednesday's trading session.
Wednesday's Volume: 55,000
Three-Month Average Volume: 25,616
Volume % Change: 95%
From a technical perspective, ESPR ripped sharply higher here back above both its 200-day moving average at $14.70 and its 50-day moving average at $14.91 with above-average volume. This sharp spike higher briefly pushed shares of ESPR into breakout territory, since the stock flirted with some near-term overhead resistance at $15.13. Shares of ESPR are now starting to trend within range of triggering another big breakout trade. That trade will hit if ESPR manages to take out Wednesday's intraday high at $15.28 and then once it clears more key overhead resistance levels at $15.97 to $16.32 with high volume.
Traders should now look for long-biased trades in ESPR as long as it's trending above Wednesday's intraday low of $14.42 or above some more key near-term support at $13.90 and then once it sustains a move or close above those breakout levels with volume that's near or above 25,616 shares. If that breakout materializes soon, then ESPR will set up to re-test or possibly take out its next major overhead resistance levels at $17 to $18, or even $18.83 to $19.55.