Stock Quotes in this Article: C, CLR, AEGR, EOX, KPTI

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.

Karyopharm Therapeutics

One health care stock that insiders are loading up on here is Karyopharm Therapeutics (KPTI), which focuses on the discovery and development of drugs directed against nuclear transport targets for the treatment of cancer and other major diseases. Insiders are buying this stock into major weakness, since shares are down by 31% over the last three months.

Karyopharm Therapeutics has a market cap of $817 million and an enterprise value of $641 million. This stock trades at a premium valuation, with a price-to-book of 5.64. Its estimated growth rate for this year is 63.7%, and for next year it's pegged at -54.2%. This is a cash-rich company, since the total cash position on its balance sheet is $144.89 million and its total debt is zero.

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A director just bought 114,419 shares, or about $2.99 million worth of stock, at $26.09 to $26.45 per share.

From a technical perspective, KPTI is currently trending below its 50-day moving average, which is bearish. This stock has been trending sideways and consolidating for the last month, with shares moving between $25.05 on the downside and $29.47 on the upside. Shares of KPTI are now starting to bounce higher off $25 a share and it's quickly pushing within range of triggering a major breakout trade above the upper-end of its recent sideways trading chart pattern.

If you're bullish on KPTI, then I would look for long-biased trades as long as this stock is trending above $25 and then once breaks out above some near-term overhead resistance levels at $28.51 to $29.47 a share and then once it clears its 50-day moving average at $30.31 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 203,502 shares. If that breakout kicks off soon, then KPTI will set up to re-test or possibly take out its next major overhead resistance level at $35 to $37.23 a share.

Aegerion Pharmaceuticals

Another biopharmaceutical player that insiders are jumping into here is Aegerion Pharmaceuticals (AEGR), which develops and commercializes therapies for patients with debilitating rare diseases in the U.S. Insiders are buying this stock into massive weakness, since shares have plunged by 53% so far in 2014.

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Aegerion Pharmaceuticals has a market cap of $969 million and an enterprise value of $823 million. This stock trades at a reasonable valuation, with a forward price-to-earnings of 14.3. Its estimated growth rate for this year is 58.4%, and for next year it's pegged at 353.8%. This is a cash-rich company, since the total cash position on its balance sheet is $116.76 million and its total debt is just $6.7 million.

The CEO just bought 10,000 shares, or about $315,000 worth of stock, at $31.59 per share. The same CEO also just bought 10,000 shares, or about $305,000 worth of stock, at $30.53 per share.

From a technical perspective, AEGR is currently trending well below both its 50-day and 200-day moving averages, which is bearish. This stock has been downtrending badly for the last five months, with shares moving lower from its high of $74.57 to its recent low of $30.29 a share. During that downtrend, shares of AEGR have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of AEGR have now formed a double bottom chart pattern at $30.43 to $30.28 a share, and it's starting to spike higher and move within range of triggering a big breakout trade.

If you're in the bull camp on AEGR, then I would look for long-biased trades as long as this stock is trending above those double bottom support zones and then once it breaks out above some near-term overhead resistance levels at $34.16 to its recent gap-down-day high of $36.55 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 1.26 million shares. If that breakout materializes soon, then AEGR will set up to re-fill some of its previous gap-down-day zone from earlier this month that started near $45 a share.

Continental Resources

One energy player that insiders are in love with here is Continental Resources (CLR), which is engaged in the exploration, development and production of crude oil and natural gas properties in the north, south, and east regions of the U.S. Insiders are buying this stock into strength, since shares are up over 20% so far in 2014.

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Continental Resources has a market cap of $25.4 billion and an enterprise value of $30.3 million. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 30 and a forward price-to-earnings of 16.7. Its estimated growth rate for this year is 31.3%, and for next year it's pegged at 17.6%. This is not a cash-rich company, since the total cash position on its balance sheet is $51.53 million and its total debt is $5.07 billion.

The CEO just bought 42,300 shares, or about $5.68 million worth of stock, at $134.46 per share.

From a technical perspective, CLR is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $100.25 to its 52-week high of $140.13 a share. During that uptrend, shares of CLR have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of CLR are now starting to trend within range of triggering a near-term breakout trade.

If you're bullish on CLR, then I would look for long-biased trades as long as this stock is trending above some support at $132.50 or above its 50-day at $130.59 and then once it breaks out above its 52-week high of $140.13 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 1.07 million shares. If that breakout triggers soon, then CLR will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $150 to $160 a share.

Citigroup

One global banking giant that insiders are active in here is Citigroup (C), which is a diversified financial services holding company that provides various financial products and services to consumers, corporations, governments and institutions. Insiders are buying this stock into modest weakness, since shares are down by 8.5% so far in 2014.

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Citigroup has a market cap of $144 million and an enterprise value of -$64.5 million. This stock trades at cheap valuation, with a trailing price-to-earnings of 10.9 and a forward price-to-earnings of 8.6. Its estimated growth rate for this year is 8.7%, and for next year it's pegged at 15.3%. This is a cash-rich company, since the total cash position on its balance sheet is $747.07 billion and its total debt is $518.73 billion.

A director just bought 21,460 shares, or about $1 million worth of stock, at $46.60 per share.

From a technical perspective, C is currently trending above its 50-day moving average and below its 200-day moving average, which is neutral trendwise. This stock has been uptrending a bit over the last few weeks, with shares moving higher from its low of $46.08 to its recent high of $48.35 a share. That move has now pushed shares of C within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on C, then I would look for long-biased trades as long as this stock is trending above some near-term support levels at $47 or at $46.08 and then once it breaks out above some near-term overhead resistance levels at $48.35 to $48.61 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 24.51 shares. If that breakout triggers soon, then C will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $49.58 to $50.99 a share. Any high-volume move above $50.99 will then give C a chance to tag $52 to $53 a share.

Emerald Oil

One final stock with some large insider buying is Emerald Oil (EOX), which operates as an independent oil and natural gas exploration and production company in the U.S. Insiders are buying this stock into notable weakness, since shares are off by 14.8% so far in 2014.

Emerald Oil has a market cap of $432 million and an enterprise value of $404 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 12.9. Its estimated growth rate for this year is 121%, and for next year it's pegged at 212%. This is barley a cash-rich company, since the total cash position on its balance sheet is $195.96 million and its total debt is $172.50 million.

A beneficial owner just bought 301,631 shares, or about $1.94 million worth of stock, at $18.70 per share.
From a technical perspective, EOX is currently trending below both its 50-day and 200-day moving averages, which is bearish. This stock recently formed a double top chart pattern at $7.33 to $7.29 a share, and since then it has sold off to its recent low of $6 a share. Shares of EOX are now starting to rebound off that $6 low and it's quickly moving within range of triggering a near-term breakout trade above some key overhead resistance levels.

If you're bullish on EOX, then look for long-biased trades as long as this stock is trending above some near-term support levels at $6.20 or at $6 and then once it breaks out above some near-term overhead resistance levels at $6.55 to its 50-day moving average of $6.74 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 1.55 million shares. If that breakout starts soon, then EOX will set up to re-test or possibly take out its next major overhead resistance levels at $7.29 to $7.33 a share. Any high-volume move above those levels will then give EOX a chance to tag $8 to $8.40.

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.