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.
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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.
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Tower Semiconductor (TSEM), an independent semiconductor foundry, manufactures analog intensive mixed-signal semiconductor devices in the U.S., Asia and Europe. This stock closed up 7.2% to $11.06 in Monday's trading session. Monday's Volume: 1.94 million
Three-Month Average Volume: 399,675
Volume % Change: 317% From a technical perspective, TSEM ripped sharply higher here right above some near-term support at $10.01 with strong upside volume flows. This sharp move to the upside on Monday is quickly pushing shares of TSEM within range of triggering a big breakout trade. That trade will hit if TSEM manages to take out Monday's intraday high of $11.19 to its 52-week high of $11.78 with high volume. Traders should now look for long-biased trades in TSEM as long as it's trending above Monday's intraday low of $10.17 or above its 50-day moving average at $9.77 and then once it sustains a move or close above those breakout levels with volume that hits near or above 399,675 shares. If that breakout hits soon, then TSEM will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $13 to $14, or even $15.