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.
Cirrus Logic (CRUS), a fabless semiconductor company, develops analog and mixed-signal integrated circuits for a range of consumer and industrial markets. This stock closed up 5.1% to $24.38 in Monday's trading session.
Monday's Volume: 2.85 million
Three-Month Average Volume: 1.57 million
Volume % Change: 75%
From a technical perspective, CRUS ripped sharply higher here right above its 50-day moving average of $22.73 with strong upside volume flows. This move pushed shares of CRUS into breakout territory, since the stock took out some near-term overhead resistance at $24.06. Shares of CRUS are now starting to trend within range of triggering another big breakout trade. That trade will hit if CRUS manages to take out Monday's intraday high of $24.46 to some past overhead resistance at $25.91 with high volume.
Traders should now look for long-biased trades in CRUS as long as it's trending above Monday's intraday low of $23.22 or above its 50-day at $22.73 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.57 million shares. If that breakout materializes soon, then CRUS will set up to re-test or possibly take out its next major overhead resistance levels at $30 to $32.