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.
Selective Insurance Group
Selective Insurance Group (SIGI) provides standard and excess and surplus lines of property and casualty insurance products in the U.S. This stock closed up 3% at $23.34 in Friday's trading session.
Friday's Volume: 438,000
Three-Month Average Volume: 153,149
Volume % Change: 216%
From a technical perspective, SIGI gapped sharply higher back above its 50-day moving average of $23 above-average volume. This spike higher on Friday is starting to move shares of SIGI within range of triggering a big breakout trade. That trade will hit if SIGI manages to take out Friday's high of $23.59 to its 200-day moving average of $24.49 with high volume.
Traders should now look for long-biased trades in SIGI as long as it's trending above Fridays low of $23.09 or above more key near-term support at $22 and then once it sustains a move or close above those breakout levels with volume that's near or above 153,149 shares. If that breakout triggers soon, then SIGI will set up to re-test or possibly take out its next major overhead resistance levels at $26 to $27, or its 52-week high at $28.31.