ES -- DX/CL -- isee -- cboe put/call -- specialist/public short ratio -- trinq -- trin -- aaii bull ratio -- abx -- cmbx -- cdx -- vxo p&f -- SPX volatility curve -- VIX:VXO skew -- commodity screen -- cot -- conference board

Wednesday, May 06, 2009

 

insider buying


via ft alphaville, this from the pragmatic capitalist -- it's dropped off to zero -- follows on his earlier comments about insider selling -- it's rampant.

the only reasonably convincing study about insider trading i recall seeing was one that correlated the market to insider activity at several months of lead time -- that is, execs foresee and plan for purchases/sales at some distance to actual business trend changes.

but activity also tends to lag big moves as well -- as alphaville articulates a bit by citing forbes, corporate officers are not perfect seers but also just like everyone else and respond with herd behavior. i think that reality explains a lot of what watchers of insider trading observe -- take february 2008, for example.

I submit that the proper way of interpreting the insiders' bullishness in recent weeks and months is that there is a good probability that the stock market will be significantly higher in one year's time.


oops.

many corporate officers are experiencing negative equity for the first time in a long time, need to raise cash, are deleveraging. they're probably as terrified and wounded as anyone else. so it's quite difficult for me to make much sense of insider trends.

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