SeaChange International

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One stock that has seem some sizable insider buying recently is SeaChange International ( SEAC), which is engaged in the delivery of multi-screen video. Insiders are hitting the bid on this stock into strength since shares are up 17% so far in 2012.

SeaChange International has a market cap of $270 million and an enterprise value of $183 million. This stock trades at a cheap valuation, with a forward price-to-earnings of 10.34. Its estimated growth rate for this year is 26.1%, and for next year it's pegged at 37.9%. This is a cash-rich company, since the total cash position on its balance sheet is $88.44 million and its total debt is zero.

A director just bought 150,000 shares, or $1.21 million worth of stock, at $8.12 per share.

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From a technical perspective, SEAC is currently trading above both its 50-day and 200-day moving averages, which is bullish. This stock recently found some big buying support at around $6.80, and since then it has run-up to its current price of $8.27 a share. That move has pushed SEAC within range of triggering a near-term breakout trade.

If you're bullish on SEAC, I would look for long-biased trades if this stock can manage to break out above some near-term overhead resistance at $8.45 to $8.50 a share with high volume. Look for volume on that move that's near or well above its three-month average volume of 154,354 shares. If we get that action soon, then watch for SEAC to trigger an even bigger breakout over $8.88 a share. If SEAC can manage to take out all of those levels with volume, then look for a move towards $10 to $11 a share in the near future.

I would avoid any long trades in SEAC if this stock fails to trigger that breakout, and then drops back below some near-term support $7.70 to $7.58 (its 50-day) a share with heavy volume. A move below those levels with volume will set this stock up for much lower prices in the near-term.

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