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."
Stocks with unusual volume are something that I tweet about on a daily basis. These are also the exact type of stocks that I love to trade and alert in real-time.
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.
- Wednesday's Volume: 1 million
- Three-Month Average Volume: 420,503
- Volume % Change: 143%
Semtech (SMTC) designs, develops, manufactures, and markets analog and mixed-signal semiconductor products. This stock closed up 5% to $27.25 in Wednesday's trading session.From a technical perspective, Semtech spiked sharply higher on Wednesday right off its 50-day moving average of $26.11 a share, with strong upside volume flows. This high-volume rip to the upside is now starting to push shares of Semtech within range of triggering a near-term breakout trade above some key overhead resistance levels. That trade will trigger if this stock manages to take out Wednesday's intraday high of $27.42 a share and then once it clears its 52-week high of $28.21 a share with high volume.
Traders should now look for long-biased trades in Semtech as long as it's trending above its 50-day moving average of $26.11 a share or above its 20-day moving average of $24.14 a share, and then once it sustains a move or close above those breakout levels with volume that hits near or above 420,503 shares. If that breakout fires off soon, then this stock will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $30 to $35 a share.