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.
Insmed (INSM), a biopharmaceutical company, focuses on developing and commercializing inhaled therapies for patients with serious lung diseases. This stock closed up 3.3% at $14.51 in Wednesday's trading session.
Wednesday's Volume: 1.56 million
Three-Month Average Volume: 823,433
Volume % Change: 165%
From a technical perspective, INSM trended higher here with strong upside volume flows. This stock recently collapsed from its high of $20.04 to its low of $11.90. During that downtrend, shares of INSM have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of INSM have now started to form a V-shaped bottom off that $11.90 low as the stock has spiked back to its current price of $14.50. Market players should now look for a continuation move higher in the short-term if INSM manages to take out Wednesday's high of $15.07 to its 200-day moving average of $15.76 with high volume.
Traders should now look for long-biased trades in INSM as long as it's trending above Wednesday's low of $13.50 or above $13 and then once it sustains a move or close above $15.07 to $15.76 with volume that's near or above 823,433 shares. If that move kicks off soon, then INSM will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $17.54 to $18.