How to Trade iCAD

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.

Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."

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.

iCAD (ICAD) provides image analysis, workflow solutions and radiation therapy that enable healthcare professionals and radiologists to identify pathologies and pinpoint cancer earlier. This stock closed up 6.3% to $12.44 in Thursday's trading session.

Thursday's Volume: 281,000
Three-Month Average Volume: 102,534
Volume % Change: 215%

From a technical perspective, ICAD trended sharply higher here back above its 50-day moving average of $11.69 with above-average volume. This move pushed shares of ICAD into breakout territory, since this stock took out some near-term overhead resistance at $12.32. Market players should now look for a continuation move higher in the short-term if ICAD manages to take out Thursday's high of $12.74 to some more key overhead resistance at $13 with high volume.

Traders should now look for long-biased trades in ICAD as long as it's trending above Thursday's low of $11.23 and then once it sustains a move or close above $12.74 to $13 with volume that's near or above 102,534 shares. If we get that move soon, then ICAD will set up to re-test or possibly take out its 52-week high at $14.11.

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.

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