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Corporate Insiders Buying Equities Like There Is No Tomorrow

 August 18, 2011 09:39 AM


If you want a bullish indicator look no further than what corporate insiders are doing. They are buying stocks on mass!

While it would seem that moms and pops and the average punter out there are running out of the equity market and into the "safety" of US Treasuries, corporate insiders appear to be doing the exact opposite. This is yet another bullish contrarian sign. From the start of 2004 at least this is the biggest buying spree that corporate insiders have engaged in.

This graph comes courtesy of sentimentrader.com. 

[Related -Buffett's Market Indicator Flashes Red, Prepare To Sell]

What are the implications? This is very bullish as corporate insiders are a lot more in tune with the long-term prospects of their respective companies than the average trader, mom and pop investor, or economist out there. To me "record" corporate insider buying in the face of the weakness we have seen in the Dow over August is yet more confirmation that most, if not all, the weakness in equities is due to fear not fundamentals. I continue to believe that any weakness in large cap US stocks should be seen as a buying opportunity for long term investors.

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