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.
Aruba Networks (ARUN) provides enterprise mobility solutions worldwide. This stock closed up 7.1% to $17.46 in Friday's trading session.
Friday's Volume: 4.43 million
Three-Month Average Volume: 2.03 million
Volume % Change: 114%
From a technical perspective, ARUN soared higher here right above some near-term support at $16.05 with above-average volume. This stock has been downtrending badly for the last four months and change, with shares moving lower from its high of around $24 to its low of $16.05. During that move, shares of ARUN have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of ARUN are now starting to rebound off that $16.05 low and it's quickly moving within range of triggering a near-term breakout trade. That trade will hit if ARUN manages to take out some near-term overhead resistance levels at $17.85 to $18.04 and then once it clears its 50-day moving average of $18.12 with high volume.
Traders should now look for long-biased trades in ARUN as long as it's trending above Friday's intraday low of $16.25 or above that recent low of $16.05 and then once it sustains a move or close above those breakout levels with volume that hits near or above 2.03 million shares. If that breakout hits soon, then ARUN will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $18.81 to $19.05. Any high-volume move above $19.05 will then give ARUN a chance to re-fill some of its previous gap-down-day zone from May that started at $20.24.