Volatility & Heavy Insider Selling

The market is moving a little higher this morning, although I expect lots of volatility ahead. This is all necessary for a proper base to be build, which will take time. It is too early for a short squeeze to develop, although based on the negativity I hear and the recent put buying, it appears the market is set up for another one of those in due time.

As one who always uses insider activity as a leading indicator, I found MSN's article "Insiders Can't Wait To Sell," very interesting. Here is a clip from the article:

For months, insiders have been negative on stocks, but last week they turned downright depressing -- as selling hit the worst levels in over three decades. Insider selling by executives and directors of shares in their own companies outweighed buying by an enormous 10 to one. "We have not seen a level of pessimism of this magnitude since we started tracking corporate insider trading activity in 1971," says Vickers Insider Weekly, an Argus newsletter that tracks insider activity.

The newsletter's eight-week rolling sell/buy ratio, meant to smooth out weekly blips, also hit record lows -- with insider selling six times as much stock as they bought. "That exceeds by a significant margin the previous record rate of selling, which occurred in August of 1983," says the newsletter. "It is a strong indication that, in the eyes of corporate executives and directors, the market is not currently a safe place for investment capital."

The top five stocks least liked by insiders, says Vickers, are: Mandalay Resort Group (MBG), Marvell Tech (MRVL), Macrovision (MVSN), Silicon Labs (SLAB), and Capital One Financial (COF).

"It appears that the current investment landscape -- according to corporate management -- is bad and getting worse," says Vickers Weekly Insider. "This is particularly unsettling as we had anticipated some break in the pace of insider dispositions since their inventory of holdings is already diminished by several months of excessive selling."