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Tuesday, March 06, 2012 10:15:45 AM
Insiders as bearish now as last April By Mark Hulbert
* Tuesday, March 6, 2012
Commentary: Insider selling has become even more lopsided
CHAPEL HILL, N.C. (MarketWatch) — Corporate insiders continue to sell shares of their companies at a well-above-average pace.
In fact, they are behaving even more bearishly than one month ago. And that’s really saying something, since — as I reported then — their pace of selling in early February was the highest since last July, right before the bottom dropped out of the market. ( Read my Feb. 9 column .)
So far, at least, the market has escaped the fate that beset it last August and September. But it hasn’t rallied very much either. Over the last month, for example, the Dow Jones Industrial Average has only gained about a half of one percent.
Going forward, the market must now contend with insider behavior that is even more lopsided to the sell side. We have to go back nearly a year — to the weeks leading up to the late April 2011 stock market top — to find another period in which insiders were as bearish as they are now.
Consider a ratio of the number of shares that insiders have sold to the number that they have bought. In the week ending last Friday, according to the Vickers Weekly Insider Report, published by Argus Research, this sell-to-buy ratio stood at 6.56-to-1. A month ago, in contrast, it was 5.77-to-1.
As Vickers editor David Coleman writes: “We have not seen such a consistent number of sales reported by insiders since May 2011, with overall selling elevated for five consecutive weeks now. When this last happened, a correction came a callin’.”
Another way of putting recent insider behavior in context is to compare it to the sell-to-buy ratio in the weeks leading up to the market bottom early last October. In a couple of those weeks, that ratio dropped well below one. The Dow is some 25% higher today than then.
I concluded my month-ago column about insiders by writing that the next big move in the market is more likely to be down than up. The insider data support this conclusion even more strongly today than then.
To be sure, the insiders aren’t always right about the market’s near-term direction. They were far too bullish at the top of the bull market in 2007, for example. But more often than not they turn out to be right, which makes sense given their access to inside information and insight.
Bulls, take note.
http://www.marketwatch.com/story/insiders-as-bearish-now-as-last-april-2012-03-06?link=home_carousel
George.
"Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise"
- Peter Lynch
Click on "In reply to", for Authors past commentaries.
* Tuesday, March 6, 2012
Commentary: Insider selling has become even more lopsided
CHAPEL HILL, N.C. (MarketWatch) — Corporate insiders continue to sell shares of their companies at a well-above-average pace.
In fact, they are behaving even more bearishly than one month ago. And that’s really saying something, since — as I reported then — their pace of selling in early February was the highest since last July, right before the bottom dropped out of the market. ( Read my Feb. 9 column .)
So far, at least, the market has escaped the fate that beset it last August and September. But it hasn’t rallied very much either. Over the last month, for example, the Dow Jones Industrial Average has only gained about a half of one percent.
Going forward, the market must now contend with insider behavior that is even more lopsided to the sell side. We have to go back nearly a year — to the weeks leading up to the late April 2011 stock market top — to find another period in which insiders were as bearish as they are now.
Consider a ratio of the number of shares that insiders have sold to the number that they have bought. In the week ending last Friday, according to the Vickers Weekly Insider Report, published by Argus Research, this sell-to-buy ratio stood at 6.56-to-1. A month ago, in contrast, it was 5.77-to-1.
As Vickers editor David Coleman writes: “We have not seen such a consistent number of sales reported by insiders since May 2011, with overall selling elevated for five consecutive weeks now. When this last happened, a correction came a callin’.”
Another way of putting recent insider behavior in context is to compare it to the sell-to-buy ratio in the weeks leading up to the market bottom early last October. In a couple of those weeks, that ratio dropped well below one. The Dow is some 25% higher today than then.
I concluded my month-ago column about insiders by writing that the next big move in the market is more likely to be down than up. The insider data support this conclusion even more strongly today than then.
To be sure, the insiders aren’t always right about the market’s near-term direction. They were far too bullish at the top of the bull market in 2007, for example. But more often than not they turn out to be right, which makes sense given their access to inside information and insight.
Bulls, take note.
http://www.marketwatch.com/story/insiders-as-bearish-now-as-last-april-2012-03-06?link=home_carousel
George.
"Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise"
- Peter Lynch
Click on "In reply to", for Authors past commentaries.
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