If you can't decide whether to buy stocks or sell them, given the backdrop of uncertainty in the market these days, here's something to chew on: Corporate insiders have been ditching stocks at an unusual pace recently.
MarketWatch's Mark Hulbert - who often looks at insider activity among corporate officers, directors and big shareholders via the Vickers Weekly Insider Report from Argus Research - pointed out on Friday that insiders have been selling a lot more shares than they have been buying. This sell-to-buy ratio rose to 6.43 to 1 as of last Friday, which is apparently higher than 95 per cent of other weekly readings over the past decade.
But when you restrict your view to companies trading on the New York Stock Exchange or the American Stock Exchange, the ratio jumps to 13.1 to 1. That's the highest since data Vickers began collecting data in 1974 and suggests that insiders are bailing out of the market during a particularly tumultuous time for the U.S. economy.
"Perhaps the strongest counterargument the bulls can muster at this point is that the insiders are not infallible," he said. "That indeed is true. Still, researchers report that they have been more right than wrong. At a minimum, I think we can all agree it can't be good news that insiders recently have been selling at such a fast pace."
David Berman