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.
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.
AVG Technologies (AVG) engages in the development and sale of Internet security software and online service solutions under the AVG brand name. This stock closed up 4.1% to $13.23 in Thursday's trading session.
Thursday's Volume: 4.16 million
Three-Month Average Volume: 567,080
Volume % Change: 418%
From a technical perspective, AVG gapped sharply higher here and broke out above some key overhead resistance levels at $17.72 to $17.95 with monster upside volume. This stock briefly traded above its 200-day moving average of $19.67, before it closed the trading session just below that level at $19.60. Market players should now look for a continuation move higher in the short-term if AVG manages to take out Thursday's high of $21.02 with strong volume.
Traders should now look for long-biased trades in AVG as long as it's trending above Thursday's low of $17.96 and then once it sustains a move or close above $21.02 with volume that's near or above 567,080 shares. If that move comes soon, then AVG will set up to re-test or possibly take out its next major overhead resistance levels at $23 to $24.
To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume 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 CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.