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.
Cliffs Natural Resources (CLV), a mining and natural resources company, produces iron ore and metallurgical coal. This stock closed up 4.1% to $15.45 in Wednesday's trading session.
Wednesday's Volume: 728,000
Three-Month Average Volume: 271,900
Volume % Change: 247%
From a technical perspective, CLV ripped notably higher here right above some near-term support levels at $14.50 to $14.35 with above-average volume. This spike higher on Wednesday briefly pushed shares of CLV into breakout territory, since it flirted with some near-term overhead resistance at $15.47 and its 50-day moving average of $15.49. Shares of CLV tagged an intraday high of $15.63, before it closed just below that level at $15.45. Market players should now look for a continuation move to the upside in the short-term if CLV manages to take out Wednesday's intraday high of $15.63 with strong volume.
Traders should now look for long-biased trades in CLV as long as it's trending above Wednesday's intraday low of $14.85 or above $14.50 to $14.35 and then once it sustains a move or close above $15.63 with volume that hits near or above 271,900 shares. If that move gets started soon, then CLV will set up to re-test or possibly take out its next major overhead resistance levels at $18 to its 200-day moving average of $18.63, or even $19 to $20.