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.
- Monday's Volume: 576,000
- Three-Month Average Volume: 524,527
- Volume % Change: 96%
Summit Materials (SUM), through its subsidiaries, produces and sells heavy-side construction materials and related downstream products. This stock is trading up 0.8% to $25.95 in Monday's trading session.
From a technical perspective, Summit Materials is spiking modestly higher here right off its 50-day moving average of $25.94 with above-average volume. This spike to the upside on Monday has briefly pushed shares of Summit Materials into breakout territory, since the stock has flirted with some near-term overhead resistance at $26.26. Shares of Summit Materials are now starting to trend within range of triggering another near-term breakout trade. That trade will trigger if this stock manages to take out Monday's intraday high of $26.79 to some more near-term overhead resistance at $27.31 with high volume.
Traders should now look for long-biased trades in Summit Materials as long as it's trending above its 50-day at $25.94 or its 20-day at $25.56 or even above support at $25 and then once it sustains a move or close above those breakout levels with volume that hits near or above 524,527 shares. If that breakout kicks off soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $28.99 to its 52-week high of $29 a share.