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.
Rubicon Technology (RBCN) - Get Rubicon Technology, Inc. Report, an electronic materials provider, develops, manufactures and sells monocrystalline sapphire and other crystalline products for LEDs, radio frequency integrated circuits , blue laser diodes, optoelectronics and other optical applications. This stock closed up 13.7% to $12.28 in Thursday's trading session.
Thursday's Volume: 2.32 million
Three-Month Average Volume: 420,959
Volume % Change: 417%
From a technical perspective, RBCN exploded higher here right off its 50-day moving average of $10.33 with monster upside volume. This move pushed shares of RBCN into breakout territory, since shares of RBCN took out some near-term overhead resistance levels at $11.50 to $11.77. Market players should now look for a continuation move higher in the short-term if RBCN manages to take out Thursday's high of $12.51 with high volume.
Traders should now look for long-biased trades in RBCN as long as it's trending above $11.50 or $11 and then once it sustains a move or close above $12.51 with volume that hits near or above 420,959 shares. If that move materializes soon, then RBCN will set up to re-test or possibly take out its 52-week high at $13.78.
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.