Last week I highlighted the constructive sentiment backdrop from both the Investors Intelligence (II) and American Association of Individual Investors (AAII) surveys. Both continue to show more bears than bulls, which from a contrarian standpoint can be seen as constructive.
This week we can add a third one, in the form of the insider buying/selling ratio above. While the 4-week moving average (black line) remains above average (more selling than buying), the weekly indicator has dipped into the buy zone. It’s not a huge signal but it’s heading in the right direction. As the saying goes, corporate insiders have many reasons to sell (their stock), but only one reason to buy. They are the smart money, buying when the public is selling.