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.
InterMune (ITMN), a biotechnology company, focuses on the research, development and commercialization of therapies for pulmonology and orphan fibrotic diseases in North America and Europe. This stock closed up 10.7% to $33.87 in Friday's trading session.
Friday's Volume: 8.27 million
Three-Month Average Volume: 2.74 million
Volume % Change: 450%
From a technical perspective, ITMN exploded to the upside here right off some support at $30 and broke out above some near-term overhead resistance at $32.53 with monster upside volume. This move is quickly pushing shares of ITMN within range of triggering another big breakout trade. That trade will hit if ITMN manages to take out Friday's high of $35.58 to its 52-week high at $38.73 with high volume.
Traders should now look for long-biased trades in ITMN as long as it's trending above Friday's low of $29.97 and then once it sustains a move or close above those breakout levels with volume that hits near or above 2.74 million shares. If that breakout gets underway soon, then ITMN will set up to enter new 52-week-high territory above $38.73, which is bullish technical price action. Some possible upside targets off that move are $45 to $50.