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.
Safeway (SWY), together with its subsidiaries, operates as a food and drug retailer in North America. This stock closed up 2% to $35.32 in Thursday's trading session.
Thursday's Volume: 20.91 million
Three-Month Average Volume: 3.59 million
Volume % Change: 423%
From a technical perspective, SWY popped modestly higher here and briefly broke out above some near-term overhead resistance at $36.67 with heavy upside volume. Shares of SWY failed to close above that breakout level, after the stock finished the trading session at $35.32. Market players should now look for a continuation move higher in the short-term if SWY manages to take out Thursday's high of $36.75 to its 52-week high at $36.90 with strong volume.
Traders should now look for long-biased trades in SWY as long as it's trending above Thursday's low of $34.89 or above more support at $33 and then once it sustains a move or close above $36.75 to $36.90 with volume that hits near or above 3.59 million shares. If we get that move soon, then SWY will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $40 to $45.
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.