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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Contango Oil & Gas
Contango Oil & Gas (MCF), an independent natural gas and oil company, explores, develops, produces and acquires natural gas and oil properties primarily offshore in the shallow waters of the Gulf of Mexico. This stock closed up 2.4% to $41.69 in Monday's trading session.
Monday's Volume: 407,000
Three-Month Average Volume: 121,294
Volume % Change: 275%
From a technical perspective, MCF jumped higher here back above its 50-day moving average of $41.11 with above-average volume. This move to the upside on Monday also pushed shares of MCF into breakout territory, since this stock took out some near-term overhead resistance at $41.54. Market players should now look for a continuation move to the upside in the short-term if MCF manages to clear Monday's intraday high of $41.73 with high volume.
Traders should now look for long-biased trades in MCF as long as it's trending above Monday's intraday low of $40.43 or above $40 and then once it sustains a move or close above $41.73 with volume that hits near or above 121,294 shares. If that move gets started soon, then MCF will set up to re-test or possibly take out its next major overhead resistance levels at $43.50 to $44, or its 200-day moving average of $44.59. Any high-volume move above $44.59 will then give MCF a chance to tag $48 to $49.