One biotechnology player that insiders are jumping into big here is Synta Pharmaceuticals (SNTA), which focuses on the discovery, development and commercialization of small molecule drugs for treating severe medical conditions, including cancer and chronic inflammatory diseases. Insiders are buying this stock into major weakness, since shares are down by 39% so far in 2014.
Synta Pharmaceuticals has a market cap of $342 million and an enterprise value of $273 million. This stock trades at a premium valuation, with a price-to-book of 7.10. Its estimated growth rate for this year is 8.7%, and for next year it's pegged at -6%. This is a cash-rich company, since the total cash position on its balance sheet is $91.48 million and its total debt is $23.40 million.
From a technical perspective, SNTA 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 month and change, with shares falling sharply from its high of $7.22 to its recent low of $3.91 a share. During that downtrend, shares of SNTA have been making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of SNTA have recently formed a double bottom chart pattern at $3.91 to $3.93 a share. If that bottom can hold, then SNTA could be setting up for a near-term breakout trade.
If you're bullish on SNTA, then I would look for long-biased trades as long as this stock is trending above those double bottom support zones or above some past support at $3.70 and then once breaks out above some near-term overhead resistance at $4.25 to just above $4.50 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 2.58 million shares. If that breakout materializes soon, then SNTA will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $5.18 to its 200-day moving average of $5.56 a share.