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.
GrubHub (GRUB) provides an online and mobile platform for restaurant pick-up and delivery orders in the U.S. This stock closed up 7.9% at $38.02 in Monday's trading session.
Monday's Volume: 817,000
Three-Month Average Volume: 451,624
Volume % Change: 90%
From a technical perspective, GRUB ripped sharply higher here and broke out above some key near-term overhead resistance levels at $37.33 to $37.79 with above-average volume. This large move to the upside on Monday is quickly pushing shares of GRUB within range of triggering an even bigger breakout trade. That trade will hit if GRUB manages to clear some key overhead resistance levels at $39.12 to its all-time high at $40.80 with high volume.
Traders should now look for long-biased trades in GRUB as long as it's trending above $36 or above Monday's intraday low of $35.03 and then once it sustains a move or close above those breakout levels with volume that's near or above 451,624 shares. If that breakout materializes soon, then GRUB will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $45 to $50, or even $55.
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