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.
CME Group (CME), through its subsidiaries, operates contract markets for the trading of futures and options on futures contracts worldwide. This stock closed up 0.7% to $71.58 in Wednesday's trading session.
Wednesday's Volume: 3.07 million
Three-Month Average Volume: 1.46 million
Volume % Change: 122%
From a technical perspective, CME bounced modestly higher here right off its 50-day moving average of $70.48 with above-average volume. This spike higher on Wednesday is starting to push shares of CME within range of triggering a major breakout trade. That trade will hit if CME manages to take out some key near-term overhead resistance levels at $72.49 to its 200-day moving average of $73 with high volume.
Traders should now look for long-biased trades in CME as long as it's trending above its 50-day moving average at $70.48 or above more support near $69 and then once it sustains a move or close above those breakout levels with volume that hits near or above 1.46 million shares. If that breakout hits soon, then CME will set up to re-test or possibly take out its next major overhead resistance levels at $75 to $77.