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.
Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."
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.
Paccar (PCAR), together with its subsidiaries, designs, manufactures and distributes light-, medium- and heavy-duty trucks and related aftermarket parts worldwide. This stock closed up 5.4% at $67.25 in Thursday's trading session.
Thursday's Volume: 3.70 million
Three-Month Average Volume: 1.74 million
Volume % Change: 255%
From a technical perspective, PCAR gapped up sharply higher here right above its 50-day moving average with heavy upside volume flows. This gap to the upside on Thursday pushed shares of PCAR into breakout territory, since the stock took out some key near-term overhead resistance levels at $65.59 to $66.65 and above $66.82. Shares of PCAR are now starting to move within range of triggering another big breakout trade. That trade will hit if PCAR manages to take out Thursday's intraday high of $67.64 and then once it clears $68.13 to its 52-week high at $68.81 with high volume.
Traders should now look for long-biased trades in PCAR as long as it's trending above Thursday's intraday low of $66.51 or above $65.50 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.74 million shares. If that breakout gets started soon, then PCAR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $75 to $80.