Tags: insider | stock | sales | surge

MarketWatch’s Hulbert: Insider Stock Sales Surge, May Presage Market Decline

By Dan Weil   |   Thursday, 20 Dec 2012 07:49 AM

Stock sales by corporate insiders are sharply on the rise, and that could signify declines ahead for the stock market says MarketWatch columnist Mark Hulbert.

For the week ended last Friday, the insider sell-to-buy ratio for NYSE stocks totaled 6.67, a major increase from 1.54 a month earlier, according to the Vickers Weekly Insider Report.

The latest figure means insiders, on average, sold almost seven shares of their companies’ stock for every one they bought.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

So why the change from a month ago?

“Either something has led them to change their minds about their companies’ longer-term prospects, or they have become short-term traders like the rest of the market,” Hulbert writes. “It’s probably a little bit of both.”

Before the two major market corrections this year, the sell-to-buy ratio stood at 7.11 and 5.13. The average for the last 20 years has been 3.41.

So, “the picture the [current] data paint is unmistakably bearish” for the stock market, Hulbert writes. Still, that’s no guarantee it will fall, he says.

For the short term, many investors have turned bullish on stocks amid optimism the fiscal cliff will be bypassed. The Standard & Poor’s 500 Index hit a two-month high Tuesday.

“There is optimism that it could be done before the end of the year, and that would be a very positive sign to the market,” Philip Tasho, chief investment officer at Tamro Capital Partners, tells Bloomberg.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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