Insider Buying more than Selling; Shorts at Highest Level since 1931

Discussion in 'Wall St. News' started by interdigital, Feb 10, 2008.

  1. Market going higher over the next 12 months? Possibly fueled by all the shorts out there...

    "Chief executives, directors and other senior officials in corporate America are buying more of their companies' shares than they're selling for the first time since 1995, prompting growing confidence that the stock market is poised to rally for the rest of the year.

    The last seven times insiders bought more stock than they sold, from 1988 to 1995, the Standard & Poor's 500-stock index rallied an average 21 percent in the following 12 months, according to data compiled by the Washington Service, a Bethesda research firm that tracks insider data for more than 500 mostly institutional clients. The purchases show that executives think the worst may be over after stocks suffered the biggest January drop in 18 years on signs that the economy is in a recession. "

    "Total purchases were 1.44 times more than sales, the first time in 13 years that insiders became net buyers. The S&P 500, the benchmark for American equities, hasn't fallen in the 12 months after insiders bought more than they sold, according to Washington Service data that go back 20 years."

    "While executives step up buying, short sellers are betting against U.S. firms like never before. The amount of short selling, when traders sell borrowed shares expecting to buy them back after prices fall, grew to 3.7 percent of the total shares on the NYSE last month, the highest since at least 1931."
  2. ammo


    watch the last 3 videos of the shows and see if u think the US mrkt is going up or down in 08,
  3. The "data" only goes back 20 years which was mostly a bullish time interval and as everybody and their brother knows, 1931 wasn't the final-bottom for the market. Does the data incorporate derivatives-related trading into account? A lot of those short-stock positions may be hedged elsewhere. We'll see if the "smart money" is correct.
  4. This may very well be.

    Even pros tend to overshort, and short late.

    Keep in mind that institutions take weeks or even months to buy, because of the incredible amounts of money they manage.

    So, recovery may be a few months away.
    This is a nice time to buy, if you are patient (and don't use too much leverage).
  5. The market never said that insiders cannot be bagholders! But it always said that the majority are bagholders. Your job as a trader is make sure you are not on the side where bagholders are standing. So, allow the market to tell you which side to sit on.
  6. You're correct, the data is skewed in it's present form.
  7. dinoman


    This data is Irrelevant
  8. Yeah, the "insiders" are hoping that the average Joe buys this argument....and ...then


    Dow down to 7,600 or thereabouts.
  9. In some years, taking advantage of shorts to sustain a rally could be very likely. This year is very hard to figure. The politics of this election year is weighing on the market unlike most election years in recent times. I do not see many , market professionals commenting on the effect of politics on the market. But in most presidential election years the market does fairly well. But from the very beginning of this year there has been selling, and I have to feel some of it is fueled by the thought this election year will break traditional patterns. Maybe there is rally if the market can comes to terms what the significance of the election is, but for now it is very very cloudy. The other thing which is so hard to figure is foreign money flows. Foreign money has propped up the market and our economy for quite a while, and that is a relatively recent circumstance. Can foreign money flows be expected to remain as constant as they have?
  10. #10     Feb 11, 2008