SEC reporting shows that the current sucker’s rally is being ignored by corporate insiders before the crash resumes.
Who are these “insiders”? Insiders are a firm’s corporate officers, directors, and major shareholders. They know more about their company than anyone else. When insiders are buying it is a clear signal to the rest of us that the firm has a positive outlook. Insider’s buying activity is routinely reported under SEC regulations.
Insiders are routinely issued huge numbers options in their firms’ shares as part of their compensation. Typically these stock options allow insiders to buy shares in their firm at below market prices. As their stock options come due the insiders must either “exercise” them by buying the shares (at below market prices) or allow the options to expire worthless. If you thought your company’s outlook was positive would buy shares at below market prices?
So what are corporate insiders doing now?
This period of time is starting to look eerily similar to the period just before prior market meltdowns. This chart of insider buying shows the complete lack of interest by insiders in their own companies. You’ll notice that insider buying was particularly low in May ‘08, July ‘08, September ‘08, December ‘08 and January ‘08 – all periods just prior to a major decline.