Acacia Research Corporation (ACTG) shares have soared nearly 25% since the beginning of the week after a flurry of insider buying. Board members Frank E. Walsh and Louis Graziadio purchased 25,000 and 32,900 shares, respectively, while General Counsel Joseph Treska acquired 2,500 shares and President Robert Stewart acquired 5,000 shares. Insider buying is widely seen as a positive sign since these personnel have in-depth insights into the company.

The move in the stock price comes shortly after the company disclosed that Cellular Communications Equipment LLC and Parthenon Unified Memory Architecture – subsidiaries of Acacia Research – entered into an agreement with Apple Inc. (AAPL) to resolve patent litigation. The details of the Sept. 1 agreement were not disclosed in the 8-K filing, but the deal could have a positive impact on the top and bottom line of Acacia Research moving forward. (See also: Who Are Patent Trolls and How Do They Work?)

Technical chart showing the performance of Acacia Research Corporation (ACTG) shares

From a technical perspective, the stock broke out from trendline resistance and its 50-day moving average at around $3.60 earlier this month before briefly surpassing its 200-day moving average at $4.94 this week. The relative strength index (RSI) moved to overbought levels of 80.64, but the moving average convergence divergence (MACD) has been in a consistent bullish uptrend since the middle of last month.

Traders should watch for some consolidation at these levels before a significant move higher given the lofty RSI reading. A sustained breakout from the 200-day moving average could lead the stock to retest prior highs at around $6.00 over the intermediate term. Traders should keep an eye out for further details about the Apple settlement as a key driver moving forward, but recent volume suggests that bulls remain in control of the stock. (For more, see: How Do Apple and Nokia Benefit From Ending Their Patent Battle?)

Chart courtesy of The author holds no position in the stock(s) mentioned except through passively managed index funds.

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