Insiders are Buying Regardless of Global Recession Fears

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IMF Signals Recession - Global Recession in 2020?

HOLD FIRE.

This could be a trap!

Well, that’s according to Goldman Sachs, anyway.

They think this market is about to take another 16% nose dive.

That would put the Dow Jones at around 17,600 points…

The US S&P 500 Index at around 2,100 points. And if the Aussie market followed, at around 4,400 points.

Shiver me timbers!

It’s a global recession, they say

Morgan Stanley jumped on stage too.

They’ve said a recession is on the way…not just a recession in the US though.

But a global recession.

Morgan Stanley’s Chetan Ahya said the ‘base case’ for the world is a recession.

I want to be surprised here, but I can’t.

They’re only telling us what we already thought before…

Either way, it may not be good for the stock market, if it hasn’t priced it in already.

And if the DOW continues to move down at its current trajectory, it could be set for its worst month since 1987.

And all because of a virus.

Yep, the Chinese Wuhan Coronavirus.

I’m not trying to down play it. I mean, it’s already claimed 7,955 lives.

And there’s still 108,000 people around the world with the virus.

Anyway, back to Morgan Stanley.

Ahya said, ‘This time will be worse than the global recession of 2001. While the policy response will provide downside protection, the underlying damage from both Covid-19′s impact and tighter financial conditions will deliver a material shock to the global economy.

Here’s what the insiders are doing

The bank is estimating the US will lose $360 billion in gross domestic product (GDP).

Guess we’ll have to wait and find out.

So, what on Earth can you do?

Well, I wanted to show you a chart I uncovered yesterday.

It’s called the Insider Stock Buy/Sell ratio.

In short, it shows a chart of insider buying. And then plots it like a volume chart.

Take a look at the chart below. Then I’ll explain how it’s calculated.

Insider Buy Sell Ratio

Source: Guru Focus

[Click to open in a new window]

The blue line is the SPY, which is the S&P 500 Index. And the green lines are monthly insider buying or selling.

Before I tell you how it’s calculated, let me first tell you what insider buying is…

Insider buying is the purchase of shares in a company by the director, officer, or an executive.

It’s not the same as ‘insider trading’. That’s illegal and occurs when the company director, officer, executive or so forth buy or sell shares based on non-public information.

So anyway, the green bars are calculated by dividing the sells over the buys.

Just look at it this way. The higher the green bars the more insiders are buying.

Take a look at the 2008–09 lows.

Look again during the 2011 sell-off. 2015 sell-off. And even the 2018 low.

Now March 2020…look at that massive green bar.

I guess it may just be speculation…but to me it appears that insiders like the price of stock right now and are going all out at the current prices.

Now, I wouldn’t encourage you to go gung-ho like them.

But this is something we should defiantly be mindful of.

These are the people who are much smarter and brighter than us on what’s going on behind closed doors.

So, feel free to add this to your tool box. I can assure you; I’ll start watching this from now on too.

Until next time,

Jonathan Evans Signature

Jonathan Evans,
Analyst, Profit Watch

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