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.
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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.
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With that in mind, let's take a look at several stocks rising on unusual volume recently.
Charles River Laboratories International
Charles River Laboratories International (CRL), together with its subsidiaries, provides research models and associated services, and outsourced preclinical services to accelerate the drug discovery and development process. This stock closed up 3.9% to $60.33 in Wednesday's trading session.
Wednesday's Volume: 1.40 million
Three-Month Average Volume: 549,762
Volume % Change: 199%
From a technical perspective, CRL jumped sharply higher here right off its 50-day moving average of $57.47 with above-average volume. This stock has been uptrending strong for the last five months and change, with shares soaring higher from its low of $44.12 to its recent high of $60.72 a share. During that uptrend, shares of CRL have been consistently making higher lows and higher highs, which is bullish technical price action. This spike on Wednesday is quickly pushing shares of CRL within range of triggering a major breakout trade. That trade will hit if CRL manages to take out its 52-week high at $60.72 with high volume.
Traders should now look for long-biased trades in CRL as long as it's trending above its 50-day at $57.47 or above more near-term support at $57 and then once it sustains a move or close above $60.72 with volume that hits near or above 549,762 shares. If that breakout triggers soon, then CRL will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $70 to $75.
First American Financial
First American Financial (FAF), through its subsidiaries, provides financial services. This stock closed up 6.2% at $27.86 in Wednesday's trading session.
Wednesday's Volume: 2.42 million
Three-Month Average Volume: 720,727
Volume % Change: 218%
From a technical perspective, FAF ripped sharply higher here right off its 50-day moving average of $26.42 with above-average volume. This spike on Wednesday pushed shares of FAF into breakout territory, after the stock took out and closed above some near-term overhead resistance levels at $27 to $27.37. That move is quickly pushing shares of FAF within range of triggering another big breakout trade. That trade will hit if FAF manages to take out Wednesday's high of $28.07 to its 52-week high at $28.57 with strong volume.
Traders should now look for long-biased trades in FAF as long as it's trending above some key near-term support around $26 and then once it sustains a move or close above those breakout levels with volume that hits near or above 720,727 shares. If that breakout gets underway soon, then FAF will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $34 to $35.
Methode Electronics
Methode Electronics (MEI), engages in the design, manufacture and marketing of components and subsystem devices worldwide. This stock closed up 5% to $35.41 in Wednesday's trading session.
Wednesday's Volume: 782,000
Three-Month Average Volume: 381,253
Volume % Change: 104%
From a technical perspective, MEI ripped higher here right off its 50-day moving average of $33.57 with strong upside volume. This stock has been uptrending for the last month and change, with shares moving higher from its low of $29.86 to its recent high of $35.74. During that uptrend, shares of MEI have been making mostly higher lows and higher highs, which is bullish technical price action. This spike on Wednesday is quickly pushing shares of MEI within range of triggering a major breakout trade. That trade will hit if MEI manages to take out some key overhead resistance levels at $35.74 to $36.92 and then once it takes out its 52-week high at $37.53 with high volume.
Traders should now look for long-biased trades in MEI as long as it's trending above its 50-day at $33.57 or above $33 and then once it sustains a move or close above those breakout levels with volume that hits near or above 381,253 shares. If that breakout materializes soon, then MEI will set up to enter new 52-week-high territory above $37.53, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45.
To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.
-- Written by Roberto Pedone in Delafield, Wis.
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At the time of publication, author had no positions in stocks mentioned.
Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including
CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.
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