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.
Caci International (CACI), together with its subsidiaries, provides information solutions and services to the U.S. federal government and commercial markets in North America and internationally. This stock closed up 1.2% to $74.44 in Thursday's trading session.
Thursday's Volume: 1.35 million
Three-Month Average Volume: 322,072
Volume % Change: 419%
From a technical perspective, CACI trended modestly higher here back above its 50-day moving average of $74.14 with monster upside volume. This stock has been uptrending a bit for the last few weeks, with shares moving higher from its low of $70.01 to its intraday high of $74.57. During that move, shares of CACI 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 CACI manages to take out Thursday's high of $74.57 with strong volume.
Traders should now look for long-biased trades in CACI as long as it's trending above some near-term support levels at $73 or at $72 and then once it sustains a move or close above $74.57 with volume that hits near or above 322,072 shares. If that move materializes soon, then CACI will set up to re-fill some of its previous gap-down-day zone from January that started at $80.
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.