As stock market rallies, insiders sell, TrimTabs warns

Increase in shares outstanding last week was biggest this decade, firm says

May 18, 2009, 2:47 p.m. EST
By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) -- As the stock market rallied in recent months, company insiders have been selling, a sign that investors should exit, too, TrimTabs Investment Research said Monday.

"As investors have turned more upbeat, the smartest money in the stock market has been leaving the party," TrimTabs wrote in a note to clients.

TrimTabs, run by Charles Biderman, tracks share buybacks and acquisitions, along with new equity issuance by companies and stock buying and selling by chief executives and other corporate insiders.

This allows the firm to gauge the level of outstanding shares, or "float," in the market -- potentially useful information when trying to work out which way prices are heading next. It's particularly helpful because companies and their executives know more than outsiders such as investors, TrimTabs argues.

Judging by the behavior of these insiders in recent weeks, the signs aren't good for the stock market, the firm said Monday.

Last week there were $31.3 billion of new equity offerings, as many of the nation's largest banks sold stock to raise new capital, TrimTabs reported, noting that's the highest level of issuance this decade.

"Companies took advantage of the rally to flood the market with new shares," TrimTabs wrote.

Meanwhile, announced corporate buying was "almost non-existent," no new cash takeovers were unveiled and insiders sold $500 million worth of stock, the firm added.

Big Rally

Markets rallied strong with good breadth today:

$COMPX 1358.28 89.64 7.07%
$INDU 6926.49 379.44 5.80%
$INX 719.60 43.07 6.37%

Markets were showing positive divergences on price and breadth actions on all time frame as noted on previous posts. The view is based on after reviewing hundred of chart set ups on price and breadth actions. Positive divergences on weekly charts are huge and the positive divergences on breadth charts are confirming the +D. While most of investors and traders are still looking for safty or for short-side profit even after markets have discounted 55-60% to 1996 levels, in my opinion, markets can show volatility to upside with 3x and 2x leveraged stocks. The price volatility will provide better trading opportunities and improve market sentiment while economy is taking time to recuperate from the recent credit crisis/contraction. SPX progressive price targets are SPX 740 and 800.

Market Volume:
Markets rallied on better volumes with strong price performances today. The volume is still excluding those who are completely turned off about the markets, so, once trillions of sideline money thinks that markets are finding stable bottom and economic turn around, this market will rocket up. With the 3x volatility, markets can go up or down with faster momentum as noted before 3x DTO went up 1000% in 8 months.

Market Stats: Week Ending 11/7

Quick Market Stats: Week Ending 10/3

Quick Market Stats: Week Ending 10/3

Posted By:Gina Francolla | Marc Briganti | Giovanny Moreano

The $700B US Bailout was signed into law on Friday, and the major markets still closed down for the day after a brief rally. The week was devastating to the US stock market with a 7.34% weekly loss for the Dow, an over 9% drop for the S&P and an almost 11% drop for the NASDAQ.
*The last time the Dow, NASDAQ, & S&P were all down 7.3% or greater was October 1987
*The Dow swung within an almost 800 point range, the majority on Monday
*The VIX hit a new 52-wk high of 48.40 on Monday
-IBM [IBM 103.44 -1.30 (-1.24%) ] had the most negative impact on the Dow down over 13% for the week
-Procter & Gamble [PG 71.02 -0.42 (-0.59%) ] had the most positive impact on the Dow & the S&P, up over 3% for the week
*Only 4 Dow components were positive for the week: PG, PFE, KFT, KO
-General Electric [GE 21.57 -0.58 (-2.62%) ] had the most negative impact on the S&P, down almost 15% for the week
-Apple [AAPL 97.07 -3.03 (-3.03%) ] had the most negative impact on the NASDAQ 100, down over 24% for the week
-Biogen Idec [BIIB 50.50 0.82 (+1.65%) ] had the most positive impact on the NASDAQ 100, up almost 2% for the week
*Only 3 NASDAQ 100 constituents were positive for the week: BIIB, HANS, TEVA

The S&P 500 sectors were all negative for the week led by Materials, for the second week running down almost 15%. The least negative sector was Consumer Staples, down over 2% for the week.
-Materials were dragged down by Freeport-McMoran [FCX 44.86 -0.74 (-1.62%) ] down over 30% for the week
-Consumer Staples were helped by Campbell Soup [CPB 39.63 0.16 (+0.41%) ] up over 5% the week

Commodities sold off broadly, as the CRB Index ended the week down more than 10%, or its worst weekly slide since September 1956 (The CRB is a basket of 19 commodities including petroleum, softs, precious metals, industrial metals, livestock, grains and natural gas).
-Oil falls on demand concerns, down over 12% for the week
-Gold is off over 6% for the week

The US Dollar ends the week up against most major currencies, especially the euro and pound, but loses some ground to the yen.
-The Euro is poised for its worst weekly performance against the US dollar ever. Currently the euro is down almost 6% against the dollar, and the previous worst weekly decline was about 4% in May, 1995.
-The Australian dollar is also poised for its biggest weekly drop against the US dollar in 20 years, down about 7%
*Economic concerns fuel the drop as well as the fall in commodities as Australia is a major exporter of natural resources