• 212 days Could Crypto Overtake Traditional Investment?
  • 216 days Americans Still Quitting Jobs At Record Pace
  • 218 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 221 days Is The Dollar Too Strong?
  • 222 days Big Tech Disappoints Investors on Earnings Calls
  • 223 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 224 days China Is Quietly Trying To Distance Itself From Russia
  • 225 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 229 days Crypto Investors Won Big In 2021
  • 229 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 230 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 232 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 232 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 236 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 236 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 237 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 239 days Are NFTs About To Take Over Gaming?
  • 239 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 242 days What’s Causing Inflation In The United States?
  • 243 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

Insiders and Momentum Still Concerning For Stocks

The fundamental drivers behind stock gains on Thursday morning came in the form of U.S. jobless claims falling to a four-year low and improving bond action in Europe. Despite today's headlines, insiders and waning bullish momentum are still waving caution flags.

Insiders Are Net Sellers

Insiders, or the people who run major corporations, tell us to be selective with cash. According to MarketWatch:

Consider an index of insider behavior calculated by the Vickers Weekly Insider Report, published by Argus Research, which is based on the ratio of shares sold by insiders to shares bought. Last week, according to the latest issue of the Vickers service, this ratio for NYSE-listed issues stood at 5.13-to-1. o put these numbers into perspective, bear in mind that the sell-to-buy ratio's long-term average is between 2-to-1 and 2.5-to-1. Vickers consider any ratio below this average to be bullish, and any number above it -- like the current level -- to be bearish.

Bullish Momentum Has Not Been Reestablished Yet

The rapid deterioration in bullish momentum that occurred between Friday afternoon and Wednesday's close has not been reversed in a meaningful way yet. While the "risk-on" (SPY) vs. "risk-off" (IEF) chart below (stocks/bonds) is still trying to hold at support, the indicators still look similar to the pre-correction period in April/May 2012. We outlined similar concerns on May 7. The S&P 500 dropped 103 points after we posted the May 7 warning.

Downtrends consist of lower highs and lower lows. In early October, the S&P 500 failed to exceed the late September high. A meaningful lower low would occur if the S&P 500 closed below 1,431, which would increase our heightened sense of alert concerning increasing odds of further corrective activity. A clear break above 1,447 (point C) followed by a close above 1,462 (near B) would assist in removing our bearish concerns.

From a pure support perspective, the S&P 500 is holding Thursday at a logical level (see green arrows below). Overhead resistance sits between 1,443 and 1,447.

$SPX (S&P 500 Large Cap Index) INDX

We are net long currently by a wide margin, which tells you we believe higher highs are due before year-end. However, we added a hedge (PSQ) earlier this week after seeing bearish set-ups in technology stocks. With maximum flexibility and an open mind, we can maintain our net bullish stance or migrate further toward a defensive stance. If we pay attention, the markets will help us navigate through these indecisive waters.


Back to homepage

Leave a comment

Leave a comment