Are We In For An Economic Downpour?


Just when I had started feeling better about the 401k,¬†when the idea of new hockey skates for the kids didn’t send me into a budgetary panic, when I thought designer jeans might be in reach – Psych!

This just in: TrimTabs Investment Research reported today that selling by corporate insiders last month reached $6.1 billion, the highest amount since May 2008. Further, the ratio of insider selling to insider buying hit 30.6, the highest level since TrimTabs began tracking the data in 2004. This is not good news.

“The best-informed market participants are sending a clear signal that the party on Wall Street is going to end soon,” said Charles Biderman, CEO of TrimTabs. “When corporate insiders are bailing, the shorts are covering and investors are borrowing to buy, it generally pays to be a seller rather than a buyer of stock”

Signals That Wall Street Rally Will Soon End

  • In addition to the insider selling, TrimTabs noted the following indications that the rally is about to end.
  • Short interest on NYSE stocks plummeted by 10.3% in the second half of July
  • Margin debt on all US listed stocks spiked 5.9% in July
  • 51.6% of advisors surveyed by Investors Intelligence are bullish

TrimTabs also reports that the actions of U.S. public companies have been bearish. In the past four months, companies have been net sellers of a record $105.2 billion in shares.

“Investors who think the U.S. economy is recovering are going to get a big shock this fall,” said Biderman. “Companies and corporate insiders are signaling that the economy is in much worse shape than conventional wisdom believes.”

Excuse me, I have a pair of jeans to return.

Image Credit: gilles chiroleu