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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.
>>Hedge Funds Are Selling These 5 Stocks -- Should You? With that in mind, let's take a look at several stocks rising on unusual volume recently.
21Vianet Group (VNET) provides carrier-neutral Internet data center services in the People's Republic of China. This stock closed up 2.5% at $31.55 in Wednesday's trading session.
Wednesday's Volume: 2.41 million
Three-Month Average Volume: 853,687
Volume % Change: 206%
>>5 Stocks Set to Soar on Bullish Earnings From a technical perspective, VNET jumped higher here and traded into new all-time-high territory with monster upside volume. This stock has been on fire uptrending strong for the last three months and change, with shares moving higher from its low of $16.27 to its intraday high of $32.19. During that uptrend, shares of VENT have been making mostly higher lows and higher highs, which is bullish technical price action.
Traders should now look for long-biased trades in VNET as long as it's trending above some near-term support at $29 and then once it sustains a move or close above Wednesday's high of $32.19 with volume that hits near or above 853,687 shares. If we get that move soon, then VNET will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that move are $35 to $40. Kongzhong
Kongzhong (KONG) provides digital entertainment services in the People's Republic of China. This stock closed up 5.2% to $11.08 in Wednesday's trading session.
Wednesday's Volume: 1.47 million
Three-Month Average Volume: 268,710
Volume % Change: 414%
>>5 Rocket Stocks Worth Buying This Week From a technical perspective, KONG jumped higher here and broke out above some near-term overhead resistance at $10.60 with heavy upside volume. This stock has been uptrending strong for the last month and change, with shares moving higher from its low of $7.51 to its intraday high of $11.57. During that move, shares of KONG have been consistently making higher lows and higher highs, which is bullish technical price action.
Traders should now look for long-biased trades in KONG as long as it's trending above Wednesday's low of $10.47 or above more support at $10 and then once it sustains a move or close above Wednesday's high of $11.57 with volume that hits near or above 268,710 shares. If we get that move soon, then KONG will set up to re-test or possibly take out its next major overhead resistance levels at $13.64 to its 52-week high at $14.92. 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.