From the latest report from Insiderscore.com:
Insider Selling Accelerates Again
•Russell 2000 Insiders Reverse Sentiment Into Strength
•Another Weak Week for S&P 500 Sentiment
•Technology, Industrial Goods Insiders Keep Foot On Selling Peddle
•Healthcare Insiders Contrarians No More
•Bankers, Oilmen Not Interested In Buying(As of 08/26/09) The improvement in sentiment that we saw two weeks ago appears to have been a head fake as the bears reared their heads again last week. Our Weekly Score posted its second-worst showing in two years, bested only by the ugly number recorded for the week ended August 11, 2009. The big drivers were a strong reversal amongst Russell 2000 constituents; a move from bullish to modestly bearish sentiment within the Healthcare sector; and, continued very bearish sentiment within the Technology sector. Overall, companies with selling outnumbered companies with buying by a more than 2-to-1 ratio for just the second time since the week ended February 27, 2007 (the other time being two weeks ago) as net companies with buying fell more -21% week-over-week compared to just a -7% drop in net companies with selling.
Insider Selling – A Warning? (From our 2nd Qtr Investor Letter)
After buying heavily in early March as the market collapsed, company insiders (CEO, CFO, Directors and large holders) started selling throughout most of the quarter.
Insiderscore.com’s Weekly Score hit its lowest level in over two years as the S&P 500 climbed to its best level since January. Overall, the insider sentiment was very negative for the quarter as insiders used the market bounce to unload boat loads of company stock.
So far the market has absorbed this supply in stride and hasn’t taken the selling as a negative signal. The first two weeks of each quarter show very light insider activity due to the number of insiders constrained from selling because of closed insider windows around the time of earnings reports. We start seeing activity in the fifth and sixth week.
The last time insider sentiment was this bearish three weeks into a quarter was the second quarter of 2007. And the last time the Weekly Score was this bearish for three weeks was the third quarter of 2007. Of course, we reached the market high in that third quarter. Insiders were smart sellers right before the bear market.
But corporate insiders are people too. They are subject to the same emotions that we all are. As the market comes off the “generational low” in March, a bunch of insider selling should be expected.
Many of the sellers now were the same people that were worried about their companies going bankrupt just a few months ago. This round of insider selling is likely signaling a pause in the ferocious rally of late – but just a pause to refresh we think.
BERK
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Posted by: Penny Stocks | November 11, 2009 at 06:04 AM