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.
Agios Pharmaceuticals (AGIO), a biopharmaceutical company, focuses on the development and commercialization of therapeutics in the field of cancer metabolism and inborn errors of metabolism in the U.S. This stock closed up 27.8% to $45.35 in Monday's trading session.
Monday's Volume: 2.57 million
Three-Month Average Volume: 361,002
Volume % Change: 666%
From a technical perspective, AGIO exploded higher here and broke out above some near-term overhead resistance at $41.33 with monster upside volume. This move gapped shares of AGIO higher right off its 50-day moving average. Shares of AGIO are now starting to trend within range of triggering another major breakout trade. That trade will hit if AGIO manages to take out Monday's high of $46 to more resistance at $47.62 and then once it takes out its all-time high at $49.79 with high volume.
Traders should now look for long-biased trades in AGIO as long as it's trending above Monday's low of $41.37 or above $40 and then once it sustains a move or close above those breakout levels with volume that hits near or above 361,002 shares. If that breakout hits soon, then AGIO will set up to enter new all-time-high territory above $49.79, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $60, or even $65.