Last week there were just 1.8 sales by insiders for every buy, according to the Vickers Weekly Insider report. During the previous eight weeks, there were 2.2 sales for every buy transaction, the best sell-buy ratio in nearly one year.
Note that selling almost always outnumbers buying because of stock option plans, therefore Vickers, which is owned by Argus Research, looks at any ratio below two as bullish.
"Given the ongoing improvement in our sell/buy rations, we anticipate a near-term rebound in the markets, spurred, perhaps, by better than expected corporate earnings," wrote Vickers’ David Coleman, in a prescient note at the start of this week.
Coleman signaled out Pep Boys (PBY) as a company with particularly bullish insider buying last week as the CEO, CFO and an Executive Vice President all loaded up with direct open market purchases. Peb Boys reports earnings at the beginning of September.
Other notable buys last week included Lennar, whose chief operating officer bought more than 90,000 shares of the homebuilder after the stock’s drop for its 2010 high reached more than 20 percent.
To be sure, market timing based on insider buying and selling does not have a perfect track record. Plus Coleman acknowledges in his report that the actual number of total transaction filings is down by a third as earnings season approaches.
Still, the turn in sentiment for some insiders comes at a time when many believe bearish sentiment on stocks has reached an extreme, sending the market down to very attractive valuations, no matter the macroeconomic picture. Apparently these are levels that even the habitual sellers that are corporate executives can’t resist.
For the best market insight, catch ‘Fast Money’ each night at 5pm ET and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC.
John Melloy is the Executive Producer of Fast Money. Before joining CNBC, he was an editor for Bloomberg News, overseeing the U.S. Stock Market coverage team