Insider Buys Spike
I often warn investors that insider selling can be a tricky metric to track because company executives will sell stock for a variety of reasons. For instance, many insider sales are pre-planned or are sold due to taxes. In addition, a company executive may sell a stock because they want to retire or purchase a new home – not necessarily because they think their stock will fall. Conversely, insider buying can be among the best signals for individual stocks.
For example, a IonQ (IONQ) insider made an unusually large stock purchase a few weeks ago. Since then, the stock has soared more than 20%. Beyond individual stocks, investors can measure insider buying as a whole to gauge the market. When an insider buys their own stock, they only have one goal – making money. In addition, these insiders have access to valuable information that the general public doesn’t. Insider buying recently spiked across the market, and the insider buy/sell ratio has reached its highest level since May.
CTAs Are Caught Offside
A Commodity Trading Advisor (CTA) is a firm that offers trading and investment services related to futures contracts, commodity options, and swaps. For years, U.S. stocks have outperformed international peers. However, year-to-date, global markets, like the iShares MSCI Emerging Markets ETF (EEM) and the iShares Core MSCI Europe ETF (IEUR), have finally enjoyed some rotation and are outperforming the S&P 500 Index ETF (SPY) handily.
While the rapid rotation and outperformance of European stocks are impressive, new Goldman Sachs (GS) data suggests that CTA’s may have moved to the other side of the boat too fast. According to Goldman, “CTAs are short $34 billion of U.S. equities vs long $52 billion of European equities…that spread is the largest we have ever seen by a decent margin.”
Image Source: ZeroHedge
The Media is Terrified About Economic Uncertainty
Sentiment is one of the biggest drivers of stocks in the short-term. Recently, newspapers have been writing about economic uncertainty – a lot. According to NextGen News, “Uncertainty has ramped up over the past 50 days, mostly due to the Trump administration’s vacillations regarding trade policy. This often has a chilling effect on business planning, and stock markets have responded by suffering losses. However, by the time the uncertainty index reached its current level in the past, most of the market losses had already been suffered, and recovery was soon at hand.”
Image Source: NextGen News/ Baker, Bloom, & Davis
Bottom Line
If history teaches investors anything, it’s that stock markets like to climb the “Wall of Worry.” Three metrics suggest that they may be ready to do just that.
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IonQ, Inc. (IONQ) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
