Canadian executives are continuing to show a lot of willingness to sell shares in the companies they work for.
Many corporate insiders have been locking in profits in advance of trading blackout periods associated with the second-quarter earnings reports that start flowing out of boardrooms later this month.
Canadian insider selling, by dollar value, remains at multi-year highs, according to INK Research, which monitors the buying and selling of shares by officers and directors within their own businesses. In fact, a running tabulation of insider sales over the past 60 days on July 4th hit the highest level since INK started tracking the data in January 2012.
"The behaviour of insiders at this point can best be characterized as one of heightened caution," commented Ted Dixon, CEO of INK Research, in a note today. "While our signals have been suggesting an overvalued market since late January, momentum ruled the day for the first six months of the year. However, insiders have been more than happy to sell into the rally."
INK's sentiment indicator for TSX-listed stocks - which compares buy-only transactions with sell-only orders over the past 60 days - currently stands at 104.4 per cent. At 100 per cent, the number of stocks with buying equals those with selling.
While the indicator has been hovering near that neutral level for the past several weeks, Mr. Dixon notes the underlying trend is down and shorter-term indications suggest a pick up in selling interest. Over the past 30 days, sellers have overtaken the buyers by a ratio of 1.3 to 1, he said.
Energy was a star performer of the TSX in the first half of this year. But those stocks may not be able to maintain that same level of popularity for the rest of 2014, given that crude oil and natural gas prices have recently been slipping. INK's energy sector indicator currently stands at 156 per cent, down from 165 per cent at the end of June - suggesting a subtle shift downward in insider buying interest.
Darcy Keith