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.
Natus Medical (BABY)
Wednesday's Volume: 636,000
Three-Month Average Volume: 393,673
Volume % Change: 104%
From a technical perspective, BABY spiked sharply higher here back above its 50-day moving average of $25.35 with strong upside volume. This move pushed shares of BABY into breakout territory, since the stock took out some near-term overhead resistance at $25.94. Shares of BABY are now starting to trend within range of triggering a much bigger breakout trade. That trade will hit if BABY manages to clear some more near-term overhead resistance levels at $27 to its 52-week high at $27.71 with high volume.
Traders should now look for long-biased trades in BABY as long as it's trending above Wednesday's low of $24.32 or above $24 and then once it sustains a move or close above those breakout levels with volume that hits near or above 393,673 shares. If that breakout triggers soon, then BABY will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $33 to $35.