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.
Retrophin (RTRX), a biopharmaceutical company, engages in the discovery, development and commercialization of orphan drugs for the treatment of rare and life-threatening diseases. This stock closed up 7.3% to $21.20 in Monday's trading session.
Monday's Volume: 3.24 million
Three-Month Average Volume: 350,856
Volume % Change: 733%
From a technical perspective, RTRX jumped sharply higher here right above some near-term support at $19.01 with monster upside volume. This move on Monday is quickly pushing shares of RTRX within range of triggering a big breakout trade. That trade will hit if RTRX manages to take out Monday's high of $21.40 to its 52-week high of $21.84 with high volume.
Traders should now look for long-biased trades in RTRX as long as it's trending above Monday's low of $19.65 or above more key near-term support at $19.01 and then once it sustains a move or close above those breakout levels with volume that hits near or above 350,856 shares. If that breakout hits soon, then RTRX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $30.