Market Update & Insider Transaction Analysis

Not many are convinced that markets are in a correction period as we are in Quad OE week and as markets have sold off in light volumes.

As noted earlier, markets bounced off from the intraday supports, however, market price actions are clearly showing downside momentum as we can see on daily indicators. This is after weeks of showing negative divergences in price and breath actions as previously noted.

$COMPX 1803.07
$INDU 8577.90
$INX 919.65

We will see how the Quad OE week ends; however, the two key events are not helpful for markets.

Markets are disappointed about 2 major factors:

1) The election outcome in Iran, and
2) The N.Korea actions.

These factors are not helpful for our economy.

Furthermore, we are continuing to see negative news which are not surprising, however, such as the highest credit card defaults since we are debt-spending economy without genuine job growth as millions are still going through financial crisis and out-of-jobs.

In this globalism environment, especially after decades of overspending, we will not see genuine economic growth.

Technically, as noted, SPX and DOW traded targeted 950 and 8800, respectively; and now we have seen a pull-back today. While intraday price actions are now appearing to be oversold, in a correction period, the reverse of the price action on the uptrend would be the same to downside, except usually sharper.

We have huge price vacuum since the March 6 low because markets have not shown a meaningful correction. While we need to see a confirmation of a break of the today lows, I am holding the same view that the correction is just started and markets are still quite overbought.

Volatility traded higher as alerted after showing positive divergences at the intermediate supports as noted on May 21.

As the week unfolds, we will see how the week ends; however, as previously noted, the next cycle turn is mid July.

So far, not many is thinking that we are in a correction period as shown on low trading volumes today.

Reality of our economy can be assess by the insiders of SP500 companies as the insiders are dealing with day-to-day business operations.
As shown on the SP500 list of insider transaction activities, over 90% of insiders are selling into rallies in a far greater percent than 9% buying activity with lower percent.

I noted on this a few weeks ago based on the TrimTab report as on the May 18, 2009 newsletter.

Today, my analysis of insider transaction activities shows the same as we can see the selling activities highlighted light-yellow column.

As noted on the previous commentaries, market price actions are easy to manipulated, not like our economy.

We had a report that "Credit-Card" defulats jumped to Record High in May. And it is not surprising to hear the news as we know that we have millions who are going through financial crisis.

Over 10% insider sell
IBM insiders are selling at 14.27%
TXN insiders are selling at 8.73%
MSFT insiders are selling at 3.2%

Those insider sellings are just a few examples of big cap companies are selling into the rallies.

* The evidence of the insider selling data is confirming the fact that the markets are selling into rallies which I commented during the last few weeks.

* The detailed analysis of the insider transactions is confirming market internals and price actions showing negative divergences.