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.
Mattress Firm (MFRM), through its subsidiaries, operates as a specialty retailer of mattresses, and related products and accessories in the U.S. This stock closed up 3.7% at $48.07 in Wednesday's trading session.
Wednesday's Volume: 326,000
Three-Month Average Volume: 216,873
Volume % Change: 50%
From a technical perspective, MFRM bounced notably higher here right above its 50-day moving average of $46.09 with above-average volume. This spike higher on Wednesday is starting to push shares of MFRM within range of triggering a major breakout trade. That trade will hit if MFRM manages to take out Wednesday's intraday high of $48.18 and then once it clears its all-time high of $50.34 with high volume.
Traders should now look for long-biased trades in MFRM as long as it's trending above some key near-term support levels at $46 to $45.93 and then once it sustains a move or close above those breakout levels with volume that's near or above 216,873 shares. If that breakout gets started soon, then MFRM will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $60.