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.
Momenta Pharmaceuticals (MNTA), a biotechnology company, is engaged in the structural characterization, process engineering and biologic systems analysis of complex molecules in the areas of complex generics, biosimilars and novel drugs. This stock closed up 1.2% at $11.25 in Friday's trading session.
Friday's Volume: 1.60 million
Three-Month Average Volume: 790,400
Volume % Change: 125%
From a technical perspective, MNTA bounced modestly higher here off its new 52-week low of $10.63 with above-average volume. This stock has been downtrending badly for the last three months, with shares plunging lower from its high of $19.90 to its low of $10.63. During that downtrend, shares of MNTA have been making mostly lower highs and lower lows, which is bearish technical price action. That slide has now pushed shares of MNTA into oversold territory, since its current relative strength index reading is 27.57. Oversold can always get more oversold, but it's also an area from which a stock can bounce sharply higher.
Traders should now look for long-biased trades in MNTA as long as it's trending above its 52-week low of $10.63 and then once it sustains a move or close above Friday's high of $11.31 to more near-term overhead resistance at $12.13 with volume that hits near or above 790,400 shares. If that move starts soon, then MNTA will set up to re-test or possibly take out its next major overhead resistance levels at $14 to $14.50.