EC A Time For Caution?

Insider Selling – Off the Charts Bearish

Last week’s Thomson Reuters Insider Sell-to-Buy Ratio went to high levels not seen in a long time. 

Not every bullish or bearish signal has reliably predicted a correction. Signals are not certainties. On the other hand, four negative selling flurries since last May correlated closely with the few significant market declines that occurred during 2013. 

The Jan. 17, 2014 reading on Insider Selling versus Insider Buying was really exaggerated. Company officers, Directors and 5% owners were unloading shares at their briskest pace in more than a year. 

 

The Thomson Reuters data are useful for short-term (weeks to months) predictions rather than long-term trends. Because the broad market is very close to record highs, it is obvious that in 2013 the “sell” signals were quite temporary. Acting on them, without returning to the market in a timely manner, would have been a mistake.  

This appears to be a good time to consider taking profits on stocks that are fully valued. It is also a time to be especially selective before committing to new names. But would I sell everything? No.