Professional traders running mutual funds and hedge funds don't just look at a stock's price moves, they track big changes in volume activity. Often, when above-average volume moves into a stock, 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."
These types of traders like to get in well before a bigger trend, 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.
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With that in mind, let's take a look at several stocks rising on unusual volume recently.
- Wednesday's Volume: 426,000
- Three-Month Average Volume: 101,385
- Volume % Change: 351%
From a technical perspective, MyoKardia (MYOK) ripped sharply higher right off its 20-day moving average of $12.25 a share and back above its 50-day moving average of $12.55 a share with big volume. This high-volume spike is now pushing this stock within range of triggering a big breakout trade.
Traders should now look for long-biased trades in MyoKardia, as long as it's trending above its 20-day at $12.25 or above more support at $11.80, and then once it sustains a move or close above those breakout levels with volume near or above 101,385 shares. If that breakout hits soon, then this stock will set up to re-test or possibly take out its next major resistance levels at $14.50 to $15, or even its 200-day moving average of $15.27 a share