Stock Quotes in this Article: AEO, FCSC, GE, AXDX, ONTX

DELAFIELD, Wis. (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.

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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.

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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 five stocks whose insiders have been doing some big buying per SEC filings.

American Eagle Outfitters

One specialty retailer that insiders are loading up on here is American Eagle Outfitters (AEO), which operates as an apparel and accessories retailer in the U.S. and Canada. Insiders are buying this stock into big weakness, since shares are off by 30% during the last six months.

American Eagle Outfitters has a market cap of $2.5 billion and an enterprise value of $2.1 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 15.80 and a forward price-to-earnings of 14.89. Its estimated growth rate for this year is -47.5%, and for next year it's pegged at 23.3%. This is a cash-rich company, since the total cash position on its balance sheet is $357.12 million and its total debt is zero. This stock currently sports a dividend yield of 3.9%.

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The chairman of the board just bought 500,000 shares, or $6.42 million worth of stock, at $12.84 per share.

From a technical perspective, AEO is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending over the last few weeks, with shares moving lower from its high of $15.69 to its recent low of $12.59 a share. During that move, shares of AEO have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of AEO have started to rebound off that $12.59 low and it's quickly moving within range of triggering a near-term breakout trade.

If you're bullish on AEO, then I would look for long-biased trades as long as this stock is trending above its recent low of $12.59 and then once breaks out above some key near-term overhead resistance at $13.61 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 5.45 million shares. If that breakout hits soon, then AEO will set up to re-fill some of its previous gap-down-day zone from last week that started just above $14.50 a share. If that gap gets filled with strong volume, then AEO could easily tag its next major overhead resistance levels at $15.69 to its 200-day moving average of $16.33 a share.

Onconova Therapeutics

Another biopharmaceutical player that insiders are jumping into here is Onconova Therapeutics (ONTX), which focuses on discovering and developing small molecule drug candidates to treat cancer. Insiders are buying this stock into major weakness, since shares are down sharply during the last six months by 39%.

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Onconova Therapeutics has a market cap of $280 million and an enterprise value of $140 million. This stock trades at a premium valuation, with a price-to-sales of 50.01 and a price-to-book of 3.09. Its estimated growth rate for next year sits at 47.8%. This is a cash-rich company, since the total cash position on its balance sheet is $116.60 million and its total debt is zero.

A director just bought 57,295 shares, or about $682,000 worth of stock, at $11.86 per share.

From a technical perspective, ONTX is currently trending below its 50-day moving average, which is bearish. This stock has been uptrending for the last few weeks, with shares moving higher from its low of $10.80 to its recent high of $14.67 a share. During that uptrend, shares of ONTX have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ONTX within range of triggering a major breakout trade.

If you're in the bull camp on ONTX, then I would look for long-biased trades as long as this stock is trending above some key near-term support levels at $12 or at $11.44 a share and then once it breaks out above some near-term overhead resistance levels at $13.57 to $14.67 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 309,248 shares. If that breakout triggers soon, then ONTX will set up to re-test or possibly take out its next major overhead resistance levels at $16.72 to $17.19 a share.

General Electric

One conglomerate that insiders are in love with here is General Electric (GE), which operates as an infrastructure and financial services company worldwide. Insiders are buying this stock into modest weakness, since shares are off by 9.5% so far in 2014.

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General Electric has a market cap of $255 billion and an enterprise value of $625 billion. This stock trades at a fair valuation, with a trailing price-to-earnings of 18.71 and forward price-to-earnings of 13.99. Its estimated growth rate for this year is 3.7%, and for next year it's pegged at 7.1%. This is not a cash-rich company, since the total cash position on its balance sheet is $14 billion and its total debt is a whopping $383 billion. This stock currently sports a dividend yield of 3.5%.

The CEO just bought 40,000 shares, or about $1 million worth of stock, at $25.04 per share. Another director also just bought 10,000 shares, or about $261,000 worth of stock, at $26.18 per share.

From a technical perspective, GE is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock has been downtrending badly over the last month, with shares dropping from its high of $28.09 to its recent low of $24.90 a share. During that downtrend, shares of GE have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of GE have started to bounce off that $24.90 low and the stock is now moving within range of triggering a near-term breakout trade.

If you're bullish on GE, then I would look for long-biased trades as long as this stock is trending above its recent low of $24.90 or above its 200-day at $24.40 and then once it breaks out above some near-term overhead resistance levels at $25.62 to $26 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 volume of 38.58 shares. If that breakout hits soon, then GE will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $26.79 to $27.50 a share.

Fibrocell Science

One biotechnology player that insiders are snapping up a large amount of stock in here is Fibrocell Science (FCSC), which focuses on development of various products for aesthetic, medical and scientific applications. Insiders are buying this stock into solid strength, since shares are up by 22% so far in 2014.

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Fibrocell Science has a market cap of $195 million and an enterprise value of $183 million. This stock trades at a reasonable valuation, with a price-to-book of 6.10. Its estimated growth rate for the next quarter is 97.2%, and for next year it's pegged at 27.8%. This is a cash-rich company, since the total cash position on its balance sheet is $16.88 million and its total debt is zero.

A beneficial owner just bought 1,024,590 shares, or about $4.99 million worth of stock, at $4.88 per share.

From a technical perspective, FCSC is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has uptrending strong over the last two months, with shares soaring higher from its low of $3.28 to its recent high of $5.25 a share. During that uptrend, shares of FCSC have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of FCSC within range of triggering a big breakout trade.

If you're bullish on FCSC, then I would look for long-biased trades as long as this stock is trending above some near-term support at $4.50 or above its 50-day at $4.25 and then once it breaks out above some near-term overhead resistance levels at $5.24 to $5.25 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 volume of 116,269 shares. If that breakout hits soon, then FCSC will set up to re-test or possibly take out its next major overhead resistance levels at $6 to $6.25 a share. Any high-volume move above those levels will then give FCSC a chance to tag its 52-week high at $7.20 a share.

Accelerate Diagnostics

One final stock with notable insider buying is Accelerate Diagnostics (AXDX), which engages in the research and development and commercialization of proprietary surface chemistry formulation and quantitative bio-analytical measurement instruments. Insiders are buying this stock into big time strength, since shares are up by 51% during the last six months.

Accelerate Diagnostics has a market cap of $556 million and an enterprise value of $502 million. This stock trades at a premium valuation, with a price-to-book of 12.30. This is a cash-rich company, since the total cash position on its balance sheet is $44.41 million and its total debt is zero.

A beneficial owner just bought 16,307 shares, or about $213,000 worth of stock, at $13 per share.
From a technical perspective, AXDX is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has just started to spike modestly higher off its 50-day moving average of $13.19 a share. That spike is starting to push shares of AXDX within range of triggering a major breakout trade.

If you're bullish on AXDX, then look for long-biased trades as long as this stock is trending above $13 or above $12 and then once it breaks out above some near-term overhead resistance levels at $13.98 to $14.48 a share and then once it takes out more resistance at $14.92 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 85,303 shares. If that breakout triggers soon, then AXDX will set up to re-test or possibly take out its 52-week high at $16.45 a share. Any high-volume move above its 52-week high at $16.45 will then give AXDX a chance to tag $18 to $20 a share.

To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying 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.