How To Capitalize On A Heavy Insider Buying Signal With KEYW
KEYW Holding Corp (NASDAQ: KEYW) hasn't had a very good year. After hitting highs just north of $16 in late-March, the Aerospace & Defense stock spent until late August spiralling downward, falling all the way to a low of $11.21 on August 27.
Since then KEYW has been trending modestly higher, maneuvering back into positive territory on the year. While this may not sound like a compelling case for a buy, KEYW has one big thing going for it this week - The stock flashed a heavy insider buying signal on Monday.
When corporate insiders are buying their own stock heavily, its usually for good reason - they believe the stock is going to gain. StateoftheMarkets.com runs an entire portfolio based off of these insider buying signals (The Insiders Portfolio), and it has been stellar this year (+42.03 percent YTD). The ideal set-up for buying these insider stocks is as follows: extremely oversold conditions in the intermediate term, a period of base / turnaround, positive trending in the short term, and of course, a heavy insider buying signal. This is precisely the current set-up of KEYW.
KEYW's "line in the sand" for this trade would be the 50-day moving average at $12.47. Insider buying signals are usually the catalyst for a significant pop in the short-term, so if the stock dips below this price, the set-up is broken. Should KEYW benefit from a surge soon, look to sell just below $14. Stocks flashing insider buying signals can run for a very long time (see: TYL weekly, GDOT until October, BSFT since April), but for trading purposes, not getting greedy and taking profits after the "initial pop" still books a significant gain.
KEYW has a great set-up for a run up to $14. Insider buying signals are one of the most effective, yet under-utilized indicators in stock trading today.
When to Consider Entering the Trade:
Buy at the current price (~$12.95).
When to Consider Exiting the Trade:
At a close below $12.47 (Breakdown) / A close above $13.87 (Profit-Taking)
Disclosure: At the time of publication the editor and affiliated companies own the following positions: KEYW
KEYW Holding Corp - Last 30 Days
KEYW Holding Corp - Last 3 Months
KEYW Holding Corp - Last 6 Months
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