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.
Yahoo! (YHOO) operates as a technology company worldwide. This stock closed up 3.3% at $34.71 in Wednesday's trading session.
Wednesday's Volume: 37.86 million
Three-Month Average Volume: 19.69 million
Volume % Change: 195%
From a technical perspective, YHOO ripped higher here with strong upside volume flows. This sharp spike higher to the upside on Wednesday briefly pushed shares of YHOO back above its 50-day moving average of $34.74, before the stock closed just below that level at $34.71. Market players should now look for a continuation move to the upside in the short-term if YHOO manages to take out Wednesday's intraday high of $34.92 with high volume.
Traders should now look for long-biased trades in YHOO as long as it's trending above Wednesday's intraday low of $33.68 and then once it sustains a move or close above $34.92 with volume that hits near or above 19.69 million shares. If that move gets underway soon, then YHOO will set up to re-test or possibly take out its next major overhead resistance levels at $35.95 to its 200-day moving average of $36.21, or even $37.