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.
MEI Pharma (MEIP), a development-stage oncology company, focuses on the clinical development of therapeutics for the treatment of cancer. This stock closed up 3% at $10 in Wednesday's trading session.
Wednesday's Volume: 190,000
Three-Month Average Volume: 136,021
Volume % Change: 50%
From a technical perspective, MEIP spiked notably higher here with above-average volume. This stock recently pulled back from its high of $11.63 to its low of $9.15. That low corresponded with MEIP's 50-day moving average and since that pullback shares of MEIP have started to rebound a bit. That rebound is starting to push shares of MEIP within range of triggering a near-term breakout trade. That trade will hit if MEIP manages to take out some near-term overhead resistance levels at $10.53 to $10.75 with high volume.
Traders should now look for long-biased trades in MEIP as long as it's trending above $9.50 or above its 50-day moving average of $9.05 and then once it sustains a move or close above those breakout levels with volume that hits near or above 136,021 shares. If that breakout hits soon, then MEIP will set up to re-test or possibly take out its next major overhead resistance levels at $11.63 to its 52-week high of $12.45.