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.
SouFun (SFUN) operates a real estate Internet portal as well as a home furnishing and an improvement Website in the People's Republic of China. This stock closed up 10.9% at $12 in Wednesday's trading session.
Wednesday's Volume: 18.68 million
Three-Month Average Volume: 6.98 million
Volume % Change: 156%
From a technical perspective, SFUN exploded higher here right above its 50-day moving average of $10.55 with monster upside volume. This stock has been uptrending strong over the last month and change, with shares moving higher from its low of $8.52 to its intraday high of $12.29. During that uptrend, shares of SFUN have been making mostly higher lows and higher highs, which is bullish technical price action. Market players should now look for a continuation move to the upside in the near-term if SFUN manages to take out Wednesday's intraday high of $12.29 with strong volume.
Traders should now look for long-biased trades in SFUN as long as it's trending above Wednesday's intraday low of $10.96 and then once it sustains a move or close above $12.29 with volume that hits near or above 6.98 million shares. If that move starts soon, then SFUN will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $13.32 to $13.40.