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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.
>>5 Stocks Under $10 Set to Soar With that in mind, let's take a look at several stocks rising on unusual volume recently.
Barracuda Networks (CUDA) designs and delivers security and storage solutions. This stock closed up 1.8% at $30.30 in Friday's trading session.
Friday's Volume: 486,000
Three-Month Average Volume: 160,761
Volume % Change: 215%
From a technical perspective, CUDA jumped modestly higher here right above its 50-day moving average of $27.82 with strong upside volume. This spike higher on Friday is starting to push shares of CUDA within range of triggering a major breakout trade. That trade will hit if CUDA manages to take out Friday's intraday high of $30.64 to some more key overhead resistance at $31.89 with high volume.
Traders should now look for long-biased trades in CUDA as long as it's trending above Friday's low of $29.31 or above its 50-day at $27.82 and then once it sustains a move or close above those breakout levels with volume that's near or above 160,761 shares. If that breakout gets underway soon, then CUDA will set up to re-test or possibly take out its next major overhead resistance levels $34 to $35.50, or even $36.50. Shenandoah Telecommunications
Shenandoah Telecommunications (SHEN) provides both regulated and unregulated telecommunications services to end-user customers and other telecommunications providers in Virginia, West Virginia, Pennsylvania and Maryland. This stock closed up 2.4% to $27.94 in Friday's trading session.
Friday's Volume: 421,000
Three-Month Average Volume: 88,325
Volume % Change: 504%
From a technical perspective, SHEN trended up notably higher here and closed back above its 50-day moving average of $27.91 with heavy upside volume. This spike higher on Friday is starting to push shares of SHEN within range of triggering a near-term breakout trade. That trade will hit if SHEN manages to take out Friday's intraday high of $28.08 to some more near-term overhead resistance at $28.13 with high volume.
Traders should now look for long-biased trades in SHEN as long as it's trending above $27 or above its 200-day at $26.05 and then once it sustains a move or close above those breakout levels with volume that hits near or above 88,325 shares. If that breakout begins soon, then SHEN will set up to re-test or possibly take out its next major overhead resistance levels at $30.50 to $31.50, or even $32.75. 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.