October 28, 2010
|The charade is almost up, as the bad-but-getting-even-worse main street economy is not remotely factored in to Wall Street’s casino calculations.|
If you’re a baby boomer who still believes in the stock market since the financial collapse of 2008, listen up. The floor of this Ponzi scheme is about to drop out, leaving you punching a clock for some time to come and holding an empty retirement bag for your effort. The engineered crash is coming and the elite are jumping ship in droves — you should join them and get out ASAP.
Stock market insider selling has now reached record highs. The trend has been increasing for the last several years, but now the ratios are getting beyond ridiculous. Earlier this month, Zero Hedge reported that the insider selling-to-buying ratio is 2341 to 1. Tyler Durden wrote:
After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street’s liars and CNBC’s clowns will have you throw all your money into “leading” techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone.
Today, CNBC reported that the insider selling activity at some of the largest traded companies is at an all-time high. This can’t be a good sign of things to come. The article points to the analysis of Alan Newman, a market strategist who tracks insider trading: “The overwhelming volume of sell transactions relative to buy transactions by company insiders over the last six months in key leading sectors of the market is the worst . . . ever.” CNBC reported that industry leaders have a staggering 3177 to 1 insider sell-to-buy ratio:
The largest companies in three of the most important leading sectors of the market have seen their executives classified as insiders sell more than 120 million shares of stock over the last six months. Top executives at these very same companies bought just 38,000 shares over that same time period, making for an eye-popping sell to buy ratio of 3,177 to one.
The grand total for the three sectors are “as awful as we have ever seen since we began doing this exercise years ago,” said Newman, who was ahead on such trends as the dangers of high-frequency trading and ETFs before the ‘Flash Crash’. “Clearly, insiders are seeing great value only in cash. Their actions speak volumes for the veracity for the current rally.”
Also quoted in the CNBC piece was Simon Baker, CEO of Baker Asset Management, who said the insider data “is good reason for considerable caution once the price action fades,” and “insiders normally buy early and sell early too. Longer term — 12 months out — it is more of a red flag.”
- A d v e r t i s e m e n t
It’s pretty difficult to excuse these levels of insider looting, but the experts are doing their best to claim that these poor executives (the titans of their industries) must take profits from stock sales because their salaries and bonuses have been cut. Who do they think they are kidding? Wall Street is still paying record salaries and bonuses, reportedly worth $144 billion (about a $1000 for every working American). There also has been very little news of other industry executives taking pay cuts, as American companies are holding record levels of cash to the tune of over a trillion dollars. In fact, the flush-with-cash CEOs continue to blame the consumer class for joblessness.
Despite the mass exodus of executives from their own company’s stock, the S&P continues to remain somewhat stable since gaining 16% from July lows. Well, those gains seem somewhat pathetic since the value of the dollar — measured against the human inflation indexes such as food and oil — has plummeted. Major food commodities are up over 50% since their July lows, while oil prices have climbed $10 to over $81/bbl, or around 14% for the same time period, with predictions to break the $100/bbl mark very shortly.
Barely covering the cost of real inflationary measures is hardly success, especially with the current risks involved with being in the stock market. These risks have only increased since the 2008 financial collapse that eventually caused the stock market to bottom out the mid-6000 range. The market has been propped up with TARP funds and driven by scandalous front-running by Goldman Sachs and other large firms leading to 70% of stock purchases to be held for an average of 11 seconds. Consequently, these robo-trading programs have also been blamed for the freak “Flash Crash” in May where the stock market plummeted over 900 points in just minutes.
The charade is almost up, as the bad-but-getting-even-worse main street economy is not remotely factored in to Wall Street’s casino calculations. Truth is, most states are approaching bankruptcy, unemployment continues to worsen, and yet another major scandal is playing out with Fraudclosure Gate. Newman, the insider trading expert, says, “At the risk of sounding like a broken record, we expect a significant correction.”
Unless you are an ultra-sophisticated trader with access to front-running software, it is time to follow these insiders out of the stock market and into real assets. As the Fed announces plans for QE2, which the stock market actually views as a good thing, the elite seem to be flocking to precious metals, commodities, and large agricultural land purchases on the expectation of an even weaker dollar. This appears to make gold, food, and oil pretty safe bets for the average bloke.