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.
Mattress Firm (MFRM), through its subsidiaries, operates as a specialty retailer of mattresses, and related products and accessories in the U.S. This stock closed up 3.6% to $46.92 in Wednesday's trading session.
Wednesday's Volume: 621,000
Three-Month Average Volume: 221,623
Volume % Change: 208%
From a technical perspective, MFRM spiked notably higher here right above its 50-day moving average of $44.68 with above-average volume. This move is quickly pushing shares of MFRM within range of triggering a big breakout trade. That trade will hit if MFRM manages to take out some near-term overhead resistance levels at $48 to its all-time high at $49.81 with high volume.
Traders should now look for long-biased trades in MFRM as long as it's trending above its 50-day at $44.68 or above more support at $44.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 221,623 shares. If that breakout hits soon, then MFRM will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $60.