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.
REX American Resources (REX), through its subsidiaries, produces and sells ethanol. This stock closed up 3.9% to $72.24 in Monday's trading session.
Monday's Volume: 226,000
Three-Month Average Volume: 124,517
Volume % Change: 58%
From a technical perspective, REX trended higher here right above some near-term support at around $68 with above-average volume. This move is quickly pushing shares of REX within range of triggering a big breakout trade. That trade will hit if REX manages to take out Monday's intraday high of $72.88 to its 52-week high of $73.33 with high volume.
Traders should now look for long-biased trades in REX as long as it's trending above Monday's low of $69.81 or above more support near $68 and then once it sustains a move or close above those breakout levels with volume that hits near or above 124,517 shares. If that breakout gets started soon, then REX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $80 to $85.