Corporate insiders are dumping positions at near-record levels, potentially hinting at troubles ahead. Exchange traded fund inverse can also hedge against potential risks in the market with small positions in inverse strategies.
According to investment research firm TrimTabs, insider selling hit $7.6 billion for the month of November, the fourth highest monthly level on record, reports Stephanie Yang for CNBC.
The selling may be foreshadowing problems to come as corporate insiders usually have more knowledge about the companies than public shareholders and what may drive the company stock movements.
“Historically when insiders are selling heavily it’s not the greatest sign,” TrimTabs chief executive David Santschi told CNBC. “I’m surprised given the valuations in the market that they’re not selling more than they are.”
Moreover, the disparity between stock leaders and laggards is growing, hinting at potential short-term trouble in the equities market.
“A widening of the spread between the market’s best performers and the rest of the market should be viewed as a cautionary sign,” Jason Trennert of Strategas Research Partners said in a recent note.
The 10 most valuable companies in the market are up 21.4% as a group this year, whereas the rest of the market shows a 2.6% loss – the 24 percentage-point spread is the widest since 1999, reports Tim Mullaney for CNBC.