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.
Changeyou.com (CYOU) develops and operates online games in the People's Republic of China. This stock closed up 5.5% at $30.85 in Monday's trading session.
Monday's Volume: 781,000
Three-Month Average Volume: 344,692
Volume % Change: 165%
From a technical perspective, CYOU jumped higher here back above its 50-day moving average of $29.90 with above-average volume. This move is quickly pushing shares of CYOU within range of triggering a big breakout trade. That trade will hit if CYOU manages to take out its 200-day moving average at $31.19 and then once it clears more resistance at $31.69 with high volume.
Traders should now look for long-biased trades in CYOU as long as it's trending above Monday's low of $29.50 or above $29 and then once it sustains a move or close above those breakout levels with volume that hits near or above 344,692 shares. If that breakout gets underway soon, then CYOU will set up to re-test or possibly take out its next major overhead resistance level at $34.32. Any high-volume move above that level will then give CYOU a chance to re-fill some of its previous gap-down-day zone from last October that started at $38.