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.
FibroGen (FGEN), a research-based biopharmaceutical company, discovers, develops, and commercializes therapeutic agents to treat serious unmet medical needs. This stock is trading up 7.5% to $19.69 in Monday's trading session.
Monday's Volume: 540,000
Three-Month Average Volume: 343,553
Volume % Change: 248%
From a technical perspective, FGEN is ripping sharply higher here and breaking out above some near-term overhead resistance at $18.84 with above-average volume. This stock recently formed a double bottom chart pattern at $17.04 to $16.95. Following that bottom, shares of FGEN have been rebounding higher and this stock is breaking out on Monday with strong upside volume flows. That move has now pushed shares of FGEN within range of triggering another big breakout trade. That trade will trigger if FGEN manages to take out some key near-term overhead resistance at $20 a share with high volume.
Traders should now look for long-biased trades in FGEN as long as it's trending above $18.84 or above $18 and then once it sustains a move or close above $20 with volume that hits near or above 343,553 shares. If that breakout gets set off soon, then FGEN will set up to re-test or possibly take out its next major overhead resistance levels at $22 to $23, or even its 50-day moving average of $24.36.