CHAPEL HILL, N.C. (MarketWatch) — Corporate insiders are now selling their companies’ stock at a rate not seen since late last July.
That’s a scary parallel indeed, since that late-July spike in selling came just days before one of the more painful two-week periods in the stock market in years.
In early August, as you may recall, the U.S. government lost its triple-A credit rating, and the bottom dropped out of the stock market. Between the last week of July and the second week of August, the Dow Jones Industrial Average dropped 2,000 points.
To be sure, heavy insider selling doesn’t always lead to this much market weakness, or this immediately. And there were a lot of other things going on last summer that aren’t present today.
Still, on the theory that corporate insiders — officers, directors and largest shareholders — know more about their firms’ prospects than do the rest of us, it can’t be good news that they are selling at such a heavy pace.
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