Thursday, November 11, 2010

Record Insider Selling

Last week marked the all-time record high in a single week for the number of insider shares sold.  Insiders are corporate CEO's and executives who have a clear understanding of their company's future earnings and stock price direction.

There has never been a single week in history with more than $2 billion in net insider stock sales.

The total for last week?

$4.5 billion!

The following chart (look at 3rd one down, red line) shows the massive increase in net sales last week:



So with insiders selling stocks as much as possible, it must be the poor, average retail investor (401ks and IRAs) coming back into the market to take it to these new highs, right?

Wrong.

The following chart shows the recent and unprecedented 27 straight weeks of mutual fund outflows out of the stock market.  The average American has not been fooled by this phony stock market run because they live and breath every day in the current depression.  They understand the recent run makes no sense.




So if corporate insiders and the average investor are unloading stocks at record levels, who is buying?  Who is taking stock prices up day after day on this endless run?

It is the commercial banks.  The high frequency traders.  As I discussed in Understanding Quantitative Easing, they are taking the Fed's money and speculating in the market.  They are churning stocks. 

Is the Fed's $900 billion in printed money over the next 8 months enough to keep the market artificially propped up?  We'll have to wait and see, but I think it is very unlikely.

Remember, money does not have to stay in United States markets.  I am betting it will not, and it looks like every corporate insider in America agrees with me.

h/t Tyler Durden

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