Daily Spotlight: Insider Yet to Call a Bottom

Summary

Peter Lynch famously noted that “insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.” Up until recently, 2024 was a very good year for equity investors, with all-time highs booked on a regular basis. So as insiders grew increasingly cautious over the past few months, it was easy to assume they were simply taking a little off the top. But about four weeks ago, the caution became pronounced, and last week, analysts at Vickers Stock Research noted that sell/buy ratios based on insider transactions were at their highest (most-bearish) levels since February of 2023. Indeed, Vickers’ Total Eight-Week Sell/Buy Ratio has worsened to 5.15 from 3.59 in late June, this on a scale where anything above 2.50 is considered to be bearish. More important (and keeping in mind the words of Peter Lynch) is the following: Are insiders starting to think that prices are again attractive? Not yet. Current insider-sentiment readings from Vickers remain very bearish for a third week, with the action on the NYSE especially bleak: the index sports a one-week sell/buy reading of 11:00, up from 3.97 four weeks ago. Meanwhile, the Insider Index from Vickers (which looks