But there’s another key indicator that is also flashing a red warning sign: insider selling.
Insiders are officers, directors and the largest shareholders of corporations. It is critical to follow whether insiders are buying or selling their company’s stock; it could be an indication that they expect to see their company’s stock rise or fall in price.
When insiders are buying, investors usually think it is time to buy. When insiders are selling, it could mean something is up, and so investors might consider selling.
Argus Research has posted some alarming numbers from their corporate insider key indicator concerning the overall market, to which investors should pay attention. Their ratio showed that insiders are selling their shares at a pace not seen since July 2011. If you remember, dear reader, the market proceeded to fall dramatically in August, September and October of 2011.
Their key indicator, the corporate insider sell-to-buy ratio, stood at 5.77-to-1, which means that, for every 100 shares corporate insiders bought, 577 shares were sold by insiders of the company for which they work. If companies listed on the New York Stock Exchange are taken in isolation, this key indicator gets worse…8.2-to-1.
To put some perspective on this key indicator, in November of 2011, before the over 25% market rally began, the sell-to-buy ratio stood at 0.81-to-1, which means that, for every 100 shares insiders bought, only 81 shares were sold.
The recent corporate insider selling was confirmed by Trim Tabs Research. Their key indicator showed that insider selling for the month of January was five times insider buying, which, has thus far—for the month of February—increased at an alarming 15 times. For their key indicator, the interpretation is that, in the January market rally, for every 100 shares bought by insiders, 500 shares were sold. From February 1 to 13, the selling is accelerating rapidly: for every 100 shares bought, 1,500 shares were sold.
Insider selling, in isolation, cannot be the sole key indicator on which a buy-or-sell recommendation can be made. These numbers confirm the bear market trap that is currently playing itself out with this market rally. It seems that, while a few people were buying in January’s market rally (as evidenced by very low trading money), the smart money (corporate insiders) were selling into this market rally. Sounds like the smart money is the one to heed, dear reader.
Michael’s Personal Notes:
I was very confident … read more on : http://www.profitconfidential.com/
- Author Articles
- More From This AuthorThe stock market is holding up well and it has performed strongly since the beginning of the year. I don’t want to rain on its parade, but I do want to mention that Street analysts have been quietly...Buying in the retail sector continues to be selective. Consumer spending continues to show some promise as evidenced by the retail sales reading in January that pointed to a 0.4% rise in total spending,...Copper prices, as well as all precious metals, have bounced strongly off the lows last year and there are many signs that this move up is only the beginning of the move that will push up mining...If the S&P 500 Index consolidates around the 1,350 level, then I think it’s fair to argue that the stock market is appropriately valued given all the information we have right now. I’m thinking that...The bulls have been good to us so far in 2012. The stock market continues to show optimism; the key stock indices are displaying a “golden cross, with the 50-day moving average (MA) above the 200-day MA. ...
- Related Articles
- Related ArticlesWill cloud-based business intelligence and business analytics systems become the wave of the future? The answer is a resounding yes according to recent data. They're relatively affordable and quick to deploy....Many people want to have pets. They have cats and they have dogs, some have owls and iguanas even! No matter what the creature is, they cease being just animals and become part of the family. So much so, that...Timber is considered to be one of the oldest building materials around the world. Getting timber for construction is always a fashionable trend which attracts many people. In fact, many people are considering...Human growth hormone is naturally made by the pituitary gland. It is a necessary protein hormone. This accelerates progress and mobile reproduction. Technology-not only to treat different hormonal...A pay day loan is a trusty source of cash. These are loans offered by banks when you want instant money for an emergency. Banks customarily have websites where registration can happen. Register and go along...
- Latest Articles
- Latest ArticlesA truck driver's work is quite a task and is full of intense work hours. The truckers have to move goods between places. This task can be painful. Everyone thinks that a trucker's job seems out to be very...Battersea is the area of the London Borough of Wandsworth, England. This is an inner city district of south London in fare zone 2, although its crossing the south side of the River Thames. Battersea is...Insurance planning is an area that can be more difficult to navigate than normal investment planning or financial planning, as there are mistakes to be made and prices to pay both for doing too little or doing...Based on national statistics, approximately 16 million people or 8% of the population in Unites States have diabetes. According to the American Diabetes Association, an estimated of 12,000 to 24,000 cases of...One of the best ways to keep healthy is through constant workout. Among the best equipments you can use for such workout is the actual dumbbell. These kinds of dumbbells can be found in gyms. But you do...
