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.
Sanchez Energy (SN), an independent exploration and production company, focuses on the acquisition, exploration and development of unconventional oil and natural gas resources in the onshore U.S. Gulf Coast. This stock closed up 3.2% at $33.91 in Wednesday's trading session.
Wednesday's Volume: 2.28 million
Three-Month Average Volume: 1.01 million
Volume % Change: 123%
From a technical perspective, SN ripped sharply higher here with strong upside volume flows. This stock recently gapped up sharply higher from around $28 to its all-time high of $34.50 with monster upside volume. Following that move, shares of SN have pulled back to around $31 and subsequently started to bounce higher again and move within range of triggering a near-term breakout trade. That trade will hit if SN manages to take out Wednesday's intraday high of $34.18 to its all-time high of $34.50 with high volume.
Traders should now look for long-biased trades in SN as long as it's trending above $32 or $31 and then once it sustains a move or close above those breakout levels with volume that's near or above 1.01 million shares. If that breakout triggers soon, then SN will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45.