Mark Hul­bert, Author of Hul­bert Finan­cial Digest, a newslet­ter that tracks the opin­ions of 160 newslet­ters, points out that insider sell­ing of shares is at the same level now as the fall of 2007. On one hand he points to the fact that insid­ers are feel­ing very bear­ish, and since they are insid­ers we should lis­ten to their actions. On the other hand, he points out that even when right, insid­ers are often early. We should still lis­ten — they are more often right.

Cor­po­rate insid­ers have recently been sell­ing their com­pa­nies' shares at a greater pace than at any time since the top of the bull mar­ket in the fall of 2007.

Does that mean you should imme­di­ately start light­en­ing your equity exposure?

It depends on whom you ask.

But, first, the data.

Cor­po­rate insid­ers are a company's offi­cers, direc­tors and largest share­hold­ers. They are required to report to the SEC when­ever they buy or sell shares of their com­pa­nies, and var­i­ous research firms col­lect and ana­lyze those transactions.

One is the Vick­ers Weekly Insider Report, pub­lished by Argus Research. In their lat­est issue, received Mon­day after­noon, Vick­ers reported that the ratio of insider sell­ing to insider buy­ing last week was 4.16-to-1, the high­est the ratio has been since Octo­ber 2007.

I don't need to remind you that the 2002–2007 bull mar­ket topped out that month.

To be sure, the weekly insider data can be volatile, espe­cially dur­ing peri­ods like the sum­mer, in which the over­all vol­ume of insider trans­ac­tions can be quite light. That is one of the rea­sons why Vick­ers also cal­cu­lates an eight-week aver­age of the insider sell-to-buy ratio, and it cur­rently stands at 2.69-to-1. That's the high­est that this eight-week ratio has been since Novem­ber 2007.

Read the whole arti­cle here.

Source: MarketWatch.com, July 28, 2oo9

Read more from the author/contributor here.

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