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
-- 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
TAL Education Group
TAL Education Group
) is a K-12 after-school tutoring service provider in China. It delivers its tutoring services through small classes, personalized premium services and online course offerings. This stock closed up 3.1% at $15.92 in Monday's trading session.
Monday's Volume: 643,000
Three-Month Average Volume: 269,992
Volume % Change: 175%
From a technical perspective, XRS spiked higher here right above some near-term support at $15 with above-average volume. This stock has been uptrending very strong for the last six months, with shares soaring higher from its low of $8.88 to its recent high of $16.22. During that uptrend, shares of XRS have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of XRS within range of triggering a big breakout trade. That trade will hit if XRS manages to take out Monday's high of $16.18 to its 52-week high at $16.22 with high volume.
Traders should now look for long-biased trades in XRS as long as it's trending above some key near-term support levels at $15.50 or at $15 and then once it sustains a move or close above those breakout levels with volume that's near or above 269,992 shares. If that breakout hits soon, then XRS will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $20 to $25.
) manufactures engineered wood products, plywood, lumber and particleboard as well as distributes a broad line of building materials, including wood products manufactured by the company's wood products division. This stock closed up 7% at $26.85 in Monday's trading session.
Monday's Volume: 785,000
Three-Month Average Volume: 383,468
Volume % Change: 135%
From a technical perspective, BCC gapped sharply higher here back above its 50-day moving average at $24.95 and above some near-term overhead resistance at $25.85 with strong upside volume. This move is quickly pushing shares of BCC within range of triggering a major breakout trade. That trade will hit if BCC manages to take out Monday's high of $27.06, and then once it takes out more key overhead resistance levels at $27.03 to $27.15 with high volume.
Traders should now look for long-biased trades in BCC as long as it's trending above Monday's low of $25.88 or above its 50-day at $24.95 and then once it sustains a move or close above those breakout levels with volume that's near or above 383,468 shares. If that breakout hits soon, then BCC will set up to re-test or possibly take out its next major overhead resistance levels at $29.50 to $30.50.
To see more stocks rising on unusual volume, check out the
portfolio on Stockpickr.
-- Written by Roberto Pedone in Delafield, Wis.
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At the time of publication, author had no positions in stocks mentioned. Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including
. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.