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.
Famous Dave's of America
Famous Dave's of America (DAVE) develops, owns, operates and franchises restaurants under the Famous Dave's name. This stock closed up 2.5% to $34.40 in Wednesday's trading session.
Wednesday's Volume: 554,000
Three-Month Average Volume: 68,297
Volume % Change: 771%
From a technical perspective, DAVE jumped notably higher here right above some near-term support at $32 with heavy upside volume. This uptick higher on Wednesday is starting to push shares of DAVE within range of triggering a near-term breakout trade. That trade will hit if DAVE manages to take out Wednesday's high of $34.63 to its 52-week high of $34.70 with high volume.
Traders should now look for long-biased trades in DAVE as long as it's trending above some near-term support levels at $32 or at $30.93 and then once it sustains a move or close above those breakout levels with volume that hits near or above 68,297 shares. If that breakout triggers soon, then DAVE will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45.