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.
Charles River Laboratories International (CRL), together with its subsidiaries, provides research models and associated services, and outsourced preclinical services to accelerate the drug discovery and development process. This stock closed up 3.9% to $60.33 in Wednesday's trading session.
Wednesday's Volume: 1.40 million
Three-Month Average Volume: 549,762
Volume % Change: 199%
From a technical perspective, CRL jumped sharply higher here right off its 50-day moving average of $57.47 with above-average volume. This stock has been uptrending strong for the last five months and change, with shares soaring higher from its low of $44.12 to its recent high of $60.72 a share. During that uptrend, shares of CRL have been consistently making higher lows and higher highs, which is bullish technical price action. This spike on Wednesday is quickly pushing shares of CRL within range of triggering a major breakout trade. That trade will hit if CRL manages to take out its 52-week high at $60.72 with high volume.
Traders should now look for long-biased trades in CRL as long as it's trending above its 50-day at $57.47 or above more near-term support at $57 and then once it sustains a move or close above $60.72 with volume that hits near or above 549,762 shares. If that breakout triggers soon, then CRL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $70 to $75.