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.
Horizon Pharma (HZNP), a specialty pharmaceutical company, through its subsidiaries, develops and commercializes medicines for the treatment of arthritis, pain and inflammatory diseases. This stock closed up 5.6% at $13.89 in Monday's trading session.
Monday's Volume: 5.35 million
Three-Month Average Volume: 1.87 million
Volume % Change: 187%
From a technical perspective, HZNP ripped higher here right off some near-term support at $13 with heavy upside volume. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $3.21 to its recent high of $14.27. During that uptrend, shares of HZNP have been consistently making higher lows and higher highs, which is bullish technical price action. Monday's spike higher is now quickly pushing shares of HZNP within range of triggering a big breakout trade. That trade will hit if HZNP manages to take out Monday's high of $14.13 to its all-time high at $14.27 with high volume.
Traders should now look for long-biased trades in HZNP as long as it's trending above some near-term support levels at $13 or at $12 and then once it sustains a move or close above those breakout levels with volume that this near or above 1.87 million shares. If that breakout materializes soon, then HZNP will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $17 to $20.