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Here’s Another Important Bearish Indicator: Company Insiders Sold Big Into Major Market Rebound

Here’s Another Important Bearish Indicator: Company Insiders Sold Big Into Major Market Rebound. As the insider transactions ratio chart below shows, major selling by company insiders has moved this indicator’s market forecast from bullish to bearish. The Thompson Reuters chart shows the ratio of insider sales to buys at 44. That’s well into bearish territory.  The big pickup in sales is a major change from the insider buying frenzy sparked by the market bottom in March. That buying frenzy, as it turns out,  was an accurate indicator that insiders, who have superior knowledge,  thought their shares had been oversold. Now, major insider selling into the market rebound should be heeded as an important indicator that the company executives think their shares are overbought and  could be in for a big tumble. We should note that this  is one of  number of bearish market indicators we’ve highlighted recently. Moreover, these sell signals come at time of bleak economic reports, led by the news that the second quarter Gross Domestic Product (GDP) dropped by 32.9% as a result of virus-induced business shutdowns. That’s the worst recorded GDP drop ever. And a warning of things to come as the continuing spread of the pandemic is leading to the close of more businesses, including many that had been prematurely opened, as it turns out.

Here’s Another Important Bearish Indicator: Company Insiders Sold Big Into Major Market Rebound
Here’s Another Important Bearish Indicator: Company Insiders Sold Big Into Major Market Rebound

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Brad Lamensdorf

Brad Lamensdorf, the founder and portfolio manager of Active Alts, is a principal and co-manager of the AdvisorShares Ranger Equity Bear ETF. He previously managed a long-short investment partnership from 1998-2005 under the name Tarpon Capital Management. Earlier in his career Mr. Lamensdorf was an equity trader/market strategist for the Bass Brothers’ trading arm. He managed a short only portfolio in addition to co-managing a $1bil hedging program. He also served as in-house market strategist for the entire internal and external network of Bass Brothers money managers.

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