With stocks in rally mode from the June lows, top execs are dipping their toes back into markets in what may be a bullish indicator for investors.
New data from Sundial Capital Research shows that insider buying by corporate executives — often viewed as a positive indicator for equities markets — has picked up in recent weeks, as seen in the chart below.
At the same time, insider selling has subsided from the frenzied levels seen in the second quarter, when the global economy surprised to the downside and inflation accelerated.
“The chart shows that extended periods of accumulation by corporate insiders tend to occur before stock prices start moving higher in earnest,” the Sundial Capital Research analysts pointed out. “At least since 2010, readings of this level or higher have been followed by higher stock prices twelve months later 98% of the time.”
Recent noteworthy insider buys have come from executives at Warner Brothers Discovery, Zillow, and Blackstone, according to data from Benzinga.
But corporate execs aren’t the only ones gobbling up stock after corporations exited a challenging second quarter relatively unscathed.
The S&P 500 Consumer Discretionary and Information Technology sectors have surged 20% and 16%, respectively, from their June lows. Apple stock, in particular, surged about 30% from its mid-June lows.
Meanwhile, the Nasdaq Composite has popped 19%, the S&P 500 is up 13%, and Dow Jones Industrial Average has gained 9% since June 13. The gains come as investors cheer signs that inflation has peaked, the economy isn’t in a recession, and the Federal Reserve may slow the pace of rate hikes later this year.
“The fact we are starting to see energy prices come down, that might be a sign of what is more to come for other inflation indicators,” Anastasia Amoroso, chief investment strategist at Capital, told Yahoo Finance Live. “I think we are starting to chip away at this inflation issue, and that’s a big catalyst for the markets.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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