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.
Federated National (FNHC), through its subsidiaries, is engaged in the insurance underwriting, distribution and claims processing in the U.S. This stock closed up 7.7% at $24.36 in Monday's trading session.
Monday's Volume: 432,000
Three-Month Average Volume: 199,846
Volume % Change: 102%
From a technical perspective, FNHC surged sharply higher here right off some near-term support at $22 and back above its 50-day moving average of $23.84 with strong upside volume. This sharp move to the upside on Monday also pushed shares of FNHC into breakout territory, since the stock took out some key near-term overhead resistance levels at $23.70 to $23.98. Market players should now look for a continuation move to the upside in the short-term if FNHC can manage to take out Monday's intraday high of $24.58 with high volume.
Traders should now look for long-biased trades in FNHC as long as it's trending above $23 or above Monday's intraday low of $22.15 and then once it sustains a move or close above $24.58 with volume that's near or above 199,846 shares. If that move begins soon, then FNHC will set up to re-test or possibly take out its next major overhead resistance levels at $26 to its 52-week high at $26.60. Any high-volume move above those levels will then give FNHC a chance to tag $30.
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