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.
With that in mind, let's take a look at several stocks rising on unusual volume recently.
Allison Transmission (ALSN) designs and manufactures automatic transmissions for medium- and heavy-duty commercial vehicles, and medium- and heavy-tactical U.S. military vehicles. This stock closed up 3.1% to $30.61 in Friday's trading session.
Friday's Volume: 2.21 million
Three-Month Average Volume: 762,955
Volume % Change: 237%
From a technical perspective, ALSN jumped higher here and traded into new all-time-high territory with above-average volume. This stock has been uptrending strong for the last three months and change, with shares moving higher from its low of $23.51 to its intraday high of $31.27. During that uptrend, shares of ALSN have been consistently making higher lows and higher highs, which is bullish technical price action. Market players should now look for a continuation move higher in the short-term if ALSN manages to take out Friday's high of $31.27 with high volume.
Traders should now look for long-biased trades in ALSN as long as it's trending above some near-term support at $29 and then once it sustains a move or close above Friday's high of $31.27 with volume that hits near or above 762,955 shares. If we get that move soon, then ALSN will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $35 to $40.