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.
Conatus Pharmaceuticals (CNAT), a biotechnology company, focuses on the development and commercialization of medicines to treat liver diseases in the U.S. This stock closed up 6.3% to $11.65 in Wednesday's trading session.
Wednesday's Volume: 902,000
Three-Month Average Volume: 469,908
Volume % Change: 95%
From a technical perspective, CNAT spiked sharply higher here right above some near-term support at $10.67 with strong upside volume. This move is quickly pushing shares of CNAT within range of triggering a major breakout trade. That trade will hit if CNAT manages to take out some near-term overhead resistance levels at $12.44 to $12.47 with strong volume.
Traders should now look for long-biased trades in CNAT as long as it's trending above support at $10.67 or above $10 and then once it sustains a move or close above those breakout levels with volume that hits near or above 469,908 shares. If that breakout gets underway soon, then CNAT will set up to re-test or possibly take out its all-time high at $15.67. Any high-volume move above that level could set up CNAT for a monster run towards $20.