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.
Zulily (ZU) operates as an online retailer. This stock closed up 6.4% at $35.94 in Wednesday's trading session.
Wednesday's Volume: 1.99 million
Three-Month Average Volume: 1.30 million
Volume % Change: 50%
From a technical perspective, ZU ripped sharply higher here right above some near-term support levels at $32 and at $31.81 with above-average volume. This sharp spike higher on Wednesday is quickly pushing shares of ZU within range of triggering a major breakout trade. That trade will hit if ZU manages to take out Wednesday's intraday high of $36.11 to some more key overhead resistance at $36.90 with high volume.
Traders should now look for long-biased trades in ZU as long as it's trending above Wednesday's low of $33.03 or above $32 and then once it sustains a move or close above those breakout levels with volume that this near or above 1.30 million shares. If that breakout materializes soon, then ZU will set up to re-fill some of its previous gap-down-day zone from May that started just above $50.