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.
DepoMed (DEPO), a specialty pharmaceutical company, focuses on developing products for pain and other conditions, and diseases of the central nervous system in the U.S. This stock closed up 11.4% to $13.43 in Monday's trading session.
Monday's Volume: 3.41 million
Three-Month Average Volume: 672,475
Volume % Change: 371%
From a technical perspective, DEPO soared sharply higher here right above some near-term support at $11.83 with heavy upside volume. This move pushed shares of DEPO into breakout and new 52-week-high territory, after the stock took out some near-term overhead resistance at $13.23. Market players should now look for a continuation move higher in the short-term if DEPO manages to take out Monday's high of $13.80 with strong volume.
Traders should now look for long-biased trades in DEPO as long as it's trending above Monday's low of 12.30 and then once it sustains a move or close above $13.80 with volume that hits near or above 672,475 shares. If we get that move soon, then DEPO will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $16 to $18.