|Insiders increased their buying 76% from July to $178 million, exceeding the 5-year historic average of $160 million in share purchases, according to the latest client advisory from the Insider Research team at Thomson Financial. It noted that there were substantial increases in the number of executives and companies buying their own stock.|
|Figure 1 – Ratio of insider selling to buying between November 2002 and August 2004. Data provided by http://www.thomsonfinancial.com|
|The ratio of insider sells to buys decreased slightly in August from $18.11 to $17.13 for the fourth month in neutral territory in the last five months. A sell/buy ratio reading of over $20 is considered bearish and under $12 bullish. The last time the indicator was in bullish territory was March 2003. Insider selling also increased 71% to $3 billion in August, which was not unexpected and in line with 5-year historic average of $2.8 billion in share sales.|
|Large cap buying in August was the strongest of any month in the past year. Large caps experiencing insider buying, according to the report, included Wells Fargo (WFC), Sun Microsystems (SUNW) and Tenet Healthcare (THC). Sectors enjoying some of the strongest buying included finance in which share purchases doubled and technology, which saw the highest executive level of buying in two years. Other companies experiencing insider buying included Earthlink (ELNK), Marvel Enterprises (MVL), Activision (ATVI), Invitrogen (IVGN) and M&T Bank (MTB). |
It is important to note that the Semiconductor Index has continued to drop and traders should be cautious of investing before technology stocks, especially semis, show signs of reversing.
In his latest client insider newsletter, George Muzea confirmed the neutral insider position and commented that executives have decreased their buying at the 10,200 [Dow] area, indicating that with the exception of some downtrodden stocks, few investors are finding value at current prices.
Blackman, Matt  July Insider Update, August 9
Blackman, Matt  Insiders Continue to Trade Shares for Dollars, April 13
Blackman, Matt  Insiders Aren't Buying the Bull, March 11, http://technical.traders.com/tradersonline/display.asp?art=1577
Muzea, George  The "Magic T" Newsletter, August 29
Muzea, George  The Vital Few vs. The Trivial Many, Literary Press
Seyhun, Nejat H.  "Investment Intelligence from Insider Trading," MIT Press
Thomson Financial , Insider Buying Hits Second Highest Monthly Level in Two Years, September 3, Thomson.
|Garibaldi Highlands, BC Canada|
|Phone # for sales:||604-898-9069|
Traders' Resource Links
|TradeSystemGuru.com has not added any product or service information to TRADERS' RESOURCE.|
Click here for more information about our publications!