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.
DigitalGlobe (DGI) provides imagery and imagery information products and services in the U.S. and internationally. This stock closed up 11.5% at $29.17 in Friday's trading session.
Friday's Volume: 1.98 million
Three-Month Average Volume: 615,523
Volume % Change: 175%
From a technical perspective, DGI gapped up sharply higher here back above its 50-day moving average of $28.86 and into breakout territory above some near-term overhead resistance at $28.84 with strong upside volume follows. This stock recently formed a double bottom chart pattern at $26.42 to $26.08. Following that bottom, shares of DGI have now started to gap sharply higher and the stock looks ready to continue its trend to the upside. Market players should now look for a continuation move to the upside in the short-term if DGI manages to take out Friday's intraday high of $29.88 with high volume.
Traders should now look for long-biased trades in DGI as long as it's trending above Friday's intraday low of $27.51 and then once it sustains a move or close above $29.88 with volume that this near or above 615,523 shares. If that move gets underway soon, then DGI will set up to re-test or possibly take out its next major overhead resistance levels at $31.40 to $32.52, or even its 200-day moving average of $33.57.