The Insiders are Selling Everything

Hey There Income Hunters,

I worked for  the major banks early in my career and had access to incredible information. 

For instance, in 1998 the Long Term Capital Management (LTCM) crisis nearly took the banking system down because of how much money LTCM borrowed from the banks and then went belly up.

At the worst of it, the stock market was melting down and the trading floor went silent …  

Now, I sat near the head of the unit that financed clients’ positions and overheard him telling his broker to keep buying the bank’s stock.

I thought, what does he know?

Well, what he knew was that a group of banks were coming to the rescue of LTCM, to save their own assets, and the bank’s stock went up 10x from where the insider bought it within five years from when he bought it.

Currently most insiders are selling their stocks and again we must ask ourselves what do they know?

Today, I’ll share what they know and why we should pay attention to what they are doing.

The Selling Is Telling

Insiders have been selling their stocks in big size for about a year.

In fact …

Nearly 50 executives have collected more than $220 million each from stock sales over the past  year. 

That is up 50% from 2020 and it’s no coincidence that these guys see first-hand the damage inflation has done to their businesses and how difficult it will be for them to maintain their profit margins. 

The damage away from the FAANGM names has been earth shattering …

ARK Funds names are down 70%.

Meme stocks down 60%.

Crypto off 40%.

It has been a tale of two markets … 

The Insider Selling/Buying Ratio 

The chart below is one you can not ignore. 

This chart looks at the ratio of insider selling to buying. A higher number means there is more selling than buying and vice versa. The correlation of the ratio to outright stock prices is helpful.

This is another signpost for a tightening of money flow into the markets:

The insiders have been looking at the removal of liquidity that is coming after two years of $6 trillion-plus of stimulus and thinking …. Where will the new buyers of stocks come from?

It’s a great question because the buyer of the past two years – the Fed – is now shutting down and may even become a seller of securities in the months ahead.  

The insiders are looking at $2 trillion to $3 trillion of fiscal and monetary withdrawal, plus there is still plenty of uncertainty around the effectiveness of vaccines. 

This is setting up for a real problem for CEOs because inflation plus the fiscal and monetary withdrawal equals a tremendous amount of tightening.

The bottom line is … the Fed can’t accelerate the QE taper, talk about four rate hikes in the next year AND outright QE tightening without destroying growth stocks. 

Bring It Home

The key is to follow the SMART money.

We all know the Fed and the Wall Street banking casino play by a different set of rules.

I mean just read about the Fed insider trading scandal.

So, knowing the C-xuite is selling stocks in their companies is a signal worth paying attention to.

Yesterday was a nice recovery, but was still the fifth lower low in the S&P 500.

The market environment has changed very quickly and you need to change with it.

And I’ll show you how to capitalize LIVE on Thursday when you join Option Pit for TradeFest, an awesome day of insight, ideas and fun.

Catch me from 12:30-2 p.m. EST to find out how out-of-control the Fed really is – and how you can profit from their moves.

Until then …

Live and Trade With Passion My Friends,


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