US Bulls beware

[peterpr]

For those who believe we're on track for another bull run through 2005, try this from Jay Taylor dated 15th November at: http://www.howestreet.com/story.php?ArticleId=763

Snippet

"Common folks may be piling back into stocks, but those who have the best vision of Corporate America are not. During the latest reporting week Health care joined the technology sector last week with the dubious distinction of having its insiders sell hundreds of millions of dollars of its stock during the most recent weekly reporting period. These numbers are reported in The Wall Street Journal daily and a tabulation by sector is provided every Wednesday. We have begun tallying those stats in an Excel spread sheet and will be passing them along to you because we think it is important for you to know what those with the best visibility of Corporate America are doing with their own money in the companies in which they possess inside information.

The latest weekly statistics, corporate insiders turned their paper shares into a total cash horde of $1.5 billion during the latest week. By contrast, they put a mere $50.4 million into buying stock in the companies they manage. That amounts to $29.90 of sales for every $1.00 of purchases. Over the past four weeks, since we began keeping tabs of these sector statistics, a total of $120 million of stock was purchased by insiders, while $4.2 billion was sold. In other words, for every $1 of insider stock purchases, $34.58 of insider stock was sold.

Before you allow the smooth-talking stock sales guys on CNBC convince you to get back into the equity market, we think it is important that you see what the people who have the best vision of the future are doing with their own money. It is easy for young folks who have never been through a real bear market to commit other people’s money into stocks. But when you see those who have the best view of the future in their own specialized industry sectors selling nearly $35 of stock for every dollar they are buying, we think that should raise a red flag with respect to the immediate prospects of Corporate America."

 

[JumpOff]

How does this compare with the same time last year? Could this be normal profit taking? We are coming into the spending mania known as Christmas....

Was it the selling that had jumped up, or the buying that had fallen off?
JO

 

[peterpr]

How does this compare with the same time last year? Could this be normal profit taking? We are coming into the spending mania known as Christmas....
Was it the selling that had jumped up, or the buying that had fallen off?
JO

Jo

Good point and I don't have the answer. I do know that a similar imbalance goes back to at least the end of September though - per this from Jay Taylor again at http://www.howestreet.com/story.php?ArticleId=708

"Last week, a review of insider sales by sector revealed that for every $100 of insider transactions, $98.15 involved insiders selling their own stock and only $1.85 out of every $100 involving a purchase by insiders of their own stock.

Heaviest sector selling came in technologies where $181 of sales were recorded for every $1 of purchases, and in consumer services where $106 of selling occurred by inside executives for every $1 of purchases. Some of the big name executives to sell large blocks of stock in the companies over past couple of weeks were folks like Larry Ellison of Oracle, and a very large number of shares were sold by various members of the Walton family of Wal-Mart. Also, G. Hutchins of Seagate Technology unloaded $411.3 million of his company’s stock as reported by the Wall Street Journal on September 24. "

I guess there will always be some imbalance that way because entrepreneurs naturally expect to benefit personally from companies they either build from scratch or expand rapidly. It was the gross imbalance that caught my eye. It's another complex TA issue that probably warrants further research.

I'll see if I can dig up any earlier info and would welcome observations from others.

 

[peterpr]

More from Jay Taylor on US equities sales/purchases by 'insiders' dated 22nd November:

" With the stock market’s recent rise, we have seen an acceleration of the sale of insider stock by the captains of American industry. During the latest week $47.40 of insider stock was sold for every $1 that was purchased. This brings the average for the past five weeks up to $37.22 of insider sales for every $1 of insider purchase.

As the healthy part of the American economy dies away at the expense of the parasitic growth of government and the banking sector, we see an even bigger loss of confidence in American industry taking shape. If we take away the financial sector from the latest weekly numbers (which is really a fascist industry partner of our government), the ratio would have been $72.10 of insider sales for every $1 purchased.

Those who rely on the mainstream media for all their news and information would have a hard time realizing what is really going on in the markets because this kind of information is rarely discussed. The idea is to keep the “sheeple,” as Roger Wiegand calls all us common folks, sending our money in to the stock market so the privileged few can exit at the top. This has always been the case at market tops. Those who can filter out the noise presented by the mainstream to keep us ignorant will be in a much stronger position to survive and hopefully thrive during the impending hardships of a bankrupt USA. "

Full piece at: http://www.howestreet.com/story.php?ArticleId=775

 

[peterpr]

More on the ratio of insider sales to purchases from Jay Taylor at:

http://www.howestreet.com/story.php?ArticleId=798&PHPSESSID=24a8c8b6239f7f532127506583d1a6aa

This time for the whole month of November

Once again, we see that America’s richest and most well-advised elite are not following the advice being given to the sheeple. On Wednesday, December 1, the “Wall Street Journal” pointed out that during the month of November, 'insider' sales totaled more than $6 billion, while purchases totaled just $130 million. That amounts to more than $46 of sales for every dollar of purchases. That was the highest ratio of sales to purchases by the captains of American industry since August 2000, when the equity bear market—which still remains very much intact—had just gotten started.

 

[des44]

I often say, "I HATE all stocks. They have got to really convince me-- and pretty charts are a start."

Sometimes I would like to change it slightly and say, "I HATE all analyst. They've got to really "smell good" to keep me from analysing the charts for myself."

d-

 

[peterpr]

I often say, "I HATE all stocks. They have got to really convince me-- and pretty charts are a start."
Sometimes I would like to change it slightly and say, "I HATE all analyst. They've got to really "smell good" to keep me from analysing the charts for myself."
d-

Most of his piece is a bit on the extreme/apocalyptic side but I don't think that detracts from the FACTS of the insider trades ratios quoted - and I guess the Wall Street Journal can be relied on to have the basic fats right.. I still can't find reliable historical info on it and, like I said before, there is probably always going to be an imbalance in favour of the sellers. I still think that to track that ratio against historical index highs/lows, time of year etc would probably be the basis of an interesting indicator though - possibly a damned good leading one too - though pretty damned useless for short-term timing.

Anyone know where such info may be available?