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.
Aerie Pharmaceuticals (AERI), a clinical-stage pharmaceutical company, focuses on the discovery, development, and commercialization of first-in-class therapies for the treatment of patients with glaucoma and other diseases of the eye. This stock closed up 5.7% to $16.49 in Friday's trading session.
Friday's Volume: 357,000
Three-Month Average Volume: 106,481
Volume % Change: 260%
From a technical perspective, AERI ripped higher here right above some near-term support at $14.40 with strong upside volume. This stock has been consolidating and trending sideways for the last month and change, with shares moving between $13.66 on the downside and $17.02 on the upside. This spike higher on Friday pushed shares of AERI right into its 50-day moving average of $16.49 and it's quickly pushing this stock within range of triggering a big breakout trade above the upper-end of its recent sideways trading chart pattern. That trade will hit if AERI manages to take out some key near-term overhead resistance levels at $16.78 to $17.02 with high volume.
Traders should now look for long-biased trades in AERI as long as it's trending above Friday's low of $15.01 or above more near-term support at $14.40 and then once it sustains a move or close above those breakout levels with volume that hits near or above 106,481 shares. If that breakout triggers soon, then AERI will set up to re-test or possibly take out its next major overhead resistance levels at $19 to $22, or even $23.