There’s a reason why I keep a close eye on what the insiders are doing on Wall Street…they’re the ones with more chips at the table, more access to vital information, and more tendency to leave hints because of that.
And they’ve just left us a huge hint because they’ve all just scrambled at once and set of an alarm.
The insiders haven’t all agreed so strongly about the market since April, and this is where they see the market heading…
If my memory serves me correctly, this is the first time in months that I can remember when there was only 1 insider purchase of his or her company’s stock worth at least $1 million.
But that’s what we’re looking at right now, as the only $1 million+ insider purchase in the recent filings came for Greenhill and Co, Inc.
Yet there were countless insider sales of more than a million dollars, as company officers, directors, and 10% owners appear to be dumping stock at an alarming rate right now.
While it’s worth keeping in mind that the insiders are virtually always selling more than buying, we can’t deny huge disparity in those numbers right now.
If you want to put a figure on it, let’s look at the insider transactions ration, which monitors the ratio of insider sales to buys. If that number is under 12 to 1, the insiders are bullish. If that number is over 20 to 1, the insiders are bearish.
As you might suspect, that ratio is often in the neutral area between those 2 readings, and it’s almost always been between about 8 to 1 and 28 to 1 dating back to this time last year.
But the reading to start the week was a whopping 35 to 1!
That’s as bearish as the insiders have been since April of this year. With heavy selling for companies like Constellation Brands ($74 million), Pacwest Bancorp ($41 million), and Royal Caribbean ($24 million), the bearish sentiment is clearly running rampant among the insiders right now.
And that would support the theory that all of the big upward movement in the past few weeks has simply been manufactured to give the insiders and fund managers a chance to selloff stock at a higher price before succumbing to the market’s inevitable bearish fate.
Only time will tell, but I’m certainly listening to what the insiders are basically screaming from the rooftops right now. I’m still hesitant to buy for now…
