Stock Quotes in this Article: IRWD, NBY, QCOR, TUES, XOMA

WINDERMERE, Fla. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.

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They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price.

Other times they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share.

But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside.

The key word in that last statement is "think." Just because a corporate insider thinks his or her stock is going to trade higher, that doesn't mean it will play out that way. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree with them, the stock could end up going nowhere. Also, I say "usually" because sometimes insiders are loaned money by the company to buy their own stock. Those loans are often sweetheart deals and shouldn't be viewed as organic insider buying.

At the end of the day, it's large institutional money managers running big mutual funds and hedge funds that drive stock prices, not insiders. That said, many of these savvy stock operators will follow insider buying activity when they agree with the insider that the stock is undervalued and has upside potential. This is why it's so important to always be monitoring insider activity, but it's twice as important to make sure the trend of the stock coincides with the insider buying.

Recently, a number of companies' corporate insiders have bought large amounts of stock. These insiders are finding some value in the market, which warrants a closer look at these stocks. Here's a look at some stocks where insiders have been doing some big buying in per SEC filings.

Xoma

One biotechnology and drugs player that insiders are snapping up a large amount of stock in is Xoma (XOMA). This company is engaged in the discovery, development and manufacture of therapeutic antibodies and other agents designed to treat inflammatory, autoimmune, infectious and oncological diseases. Insiders are buying this stock into some impressive strength, since shares are up a whopping 136% so far in 2012.

Xoma has a market cap of $184 million and an enterprise value of $156 million. Its estimated growth rate for this year is -13.5%, and for next year it's pegged 38.1%. This is a cash-rich company, since the total cash position on its balance sheet is $66.91 million and its total debt is $34.47 million. When you back out the debt, Xoma has a total of $32.44 million of cash on its books.

A director and beneficial owner just bought 4,722,666 shares, or about $4.72 million worth of stock, at $3.00 per share.

From a technical perspective, XOMA is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending for the last two months, with shares dropping from $4.03 to its recent low of $2.68 a share. During that downtrend, shares of XOMA have been consistently making lower highs and lower lows, which is bearish technical price action. That said, the stock has now entered oversold territory with its current relative strength index (RSI) reading at 27.8.

If you're bullish on XOMA, then I would look for long-biased trades once this stock manages to break out above some near-term overhead resistance levels at $2.72 to $2.95 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 502,070 shares. If that breakout triggers soon, then look for XOMA to re-test or possibly take out its next major overhead resistance levels at $3.39 to $3.44 a share. Any high-volume move above those levels would then give XOMA a chance to run back towards $4 a share.

Questcor Pharmaceuticals

Another name in the biotechnology and drugs complex that insiders are jumping into here is Questcor Pharmaceuticals (QCOR). This company provides prescription drugs for the treatment of multiple sclerosis, nephrotic syndrome, and infantile spasms indications. Its products include H.P. Acthar Gel and Doral. Insiders are buying this stock into some extreme weakness, since shares are down by 38% so far in 2012.

Questcor Pharmaceuticals has a market cap of $1.47 billion and an enterprise value of $1.3 billion. This stock trades at a cheap valuation, with a trailing price-to-earnings of 9.74 and a forward price-to-earnings of 6.21. Its estimated growth rate for this year is 152%, and for next year it's pegged at 26.5%. This is a cash-rich company, since the total cash position on its balance sheet is $111.91 million and its total debt is zero.

The chief technology officer and vice president just bought 55,000 shares, or about $1.31 million worth of stock, at $23.80 to $23.90 per share.

From a technical perspective, QCOR is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock plunged lower badly in late September, with shares dropping from $52 to its recent low of $17.12 a share. Following that plunge, shares of QCOR have started to uptrend sharply from $17.12 to its recent high of $26.20 a share. During that uptrend, shares of QCOR have been mostly making higher lows and higher highs, which is bullish technical price action. That move has now pushed QCOR within range of triggering a near-term breakout trade.

If you're in the bull camp on QCOR, then I would look for long-biased once this stock manages to break out above some near-term overhead resistance levels at $25.95 to $26.20 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 5,510,080 shares. If that breakout triggers soon, then QCOR will set up to re-test or possibly take out its next major overhead resistance levels at $30.89 to $32.50 a share. Any high-volume move above those levels will then put $38.26 into focus for QCOR.

Ironwood Pharmaceuticals

One biotechnology and drugs player that insiders are warming up to here is Ironwood Pharmaceuticals (IRWD). This company discovers, develops and intends to commercialize differentiated medicines that improve patients' lives. Insiders are buying this stock into some modest weakness, since shares are down by just over 10% in the last six months.

Ironwood Pharmaceuticals has a market cap of $1.24 billion and an enterprise value of $1.02 billion. Its estimated growth rate for this year is -27.7%, and for next year it's pegged at 155.4%. This is a cash-rich company, since the total cash position on its balance sheet is $193.32 million and its total debt is just $641,000.

The CEO just bought 50,000 shares, or about $582,000 worth of stock, at $11.65 per share.

From a technical perspective, IRWD is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last two months, with shares dropping from a high of $14.35 to its recent low of $11.16 a share. During that downtrend, shares of IRWD have been making mostly lower highs and lower lows, which is bearish technical price action. That said, the stock has now hit a level it has repeatedly found buying interest at for the last six months. That level sits just above $11 a share.

If you‘re bullish on IRWD, then I would look for long-biased trades if this stock can manage to hold above $11.13 a share with strong upside volume flows. I would consider any upside volume day that registers near or above its three-month average action of 590,916 shares as bullish. If IRWD can hold above that low, then this stock has a great chance of following its past trading pattern, which usually sees it bounce back towards $13 to $14 a share.

Tuesday Morning

Another name that insiders are finding attractive here is retail player Tuesday Morning (TUES). This company is a closeout retailer of upscale home furnishings, housewares, gifts and related items in the United States. Insiders are buying this stock into some notable strength, since shares are up over 70% so far in 2012.

Tuesday Morning has a market cap of $255.41 million and an enterprise value $256.30 million. This stock trades at a premium valuation, with a trailing price-to-earnings of 110.93 and a forward price-to-earnings of 26.04. Its estimated growth rate for this year is -50%, and for next year it's pegged at 283.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $10 million and its total debt is $12.5 million.

A director just bought 456,735 shares, or about $2.70 million worth of stock, at $5.86 to $5.97 per share.

From a technical perspective, TUES is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been uptrending extremely strong for the last six months, with shares rising from a low of $3.66 to its recent high of $6.86 a share. During that uptrend, shares of TUES have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed TUES within range of triggering a near-term breakout trade.

If you're in the bull camp on TUES, then I would look for long-biased as long once this stock manages to break out above some near-term overhead resistance levels at $6.21 to $6.49 a share, and then above more resistance at $6.86 a share with high volume. Look for volume on that move that registers near or above is three-month average action of 224,630 shares. If that breakout triggers soon, then look for TUES to trend well north of $7 a share and possibly towards $9 a share.

NovaBay Pharmaceuticals

The last name to consider with some decent insider buying is biotechnology and drugs player NovaBay Pharmaceuticals (NBY). This company is engaged in the discovery and development of innovative product candidates for the treatment or prevention of a range of infections in hospital and non-hospital environments. This stock has traded flat so far in 2012, with shares down by just 1.5%.

NovaBay Pharmaceuticals has a market cap of $38.79 and an enterprise value of $27.68 million. Its estimated growth rate for this year is -45%, and for next year it's pegged at 10.3%. This is a cash-rich company, since the total cash position on its balance sheet is $11.88 million and its total debt is zero.

A beneficial owner just bought 398,800 shares, or around $3.17 million worth of stock, at $7.83 to $8.02 per share.

From a technical perspective, NBY is currently trending just above its 50-day and 200-day moving averages, which is bullish. This stock has been trending sideways for the past month and change, with shares moving between $1.11 on the downside and $1.40 on the upside. A high-volume move outside of that range will likely setup the next major trend for shares of NBY.

If you're bullish on NBY, then I would look for long-biased once this stock manages to break out above some near-term overhead resistance at $1.40 a share with high volume. Look for a sustained move or close above $1.40 a share with volume that hits near or above its three-month average action of 146,510 shares. If NBY triggers that move soon, then this stock will set up to re-test or possibly take out its next major overhead resistance levels at $1.56 to $1.58 a share. Any high-volume move above those levels will then set up NBY to take out more resistance levels at $1.72 to $2.20 a share.

To see more stocks with notable insider buying like Theravance (THRX), AGCO (AGCO) and UnitedHealth Group (UNH), check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Winderemere, Fla.

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At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Windermere, Fla., 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.