As I have been alluding to over the past couple of weeks, anticipating a correction (beyond 1% from the near term highs) in the equity markets has been very brutal. This market has made road kill of a lot of analysts and indicators. With that being said, this week's sentiment update not only has the "dumb money" being bullish (as expected) but company insiders (the "smart money") have increased their selling significantly. This is the third time since November, 2010 (when the Fed started asset purchases) that these three indicators have been aligned in such a manner. Will the third time be the charm leading to a correction and a better risk adjusted buying opportunity?
"The number of sellers jumped 49% week-over-week while the number of buyers was virtually flat. Insiders at S&P 500, Technology and Industrial Goods were the busiest sellers. Conviction (quality) was strong, and the quantity of sellers in the S&P 500 was the second-highest on record while the figure for the Technology sector was the fourth-highest (the record consisting of 369 weeks dating to January 1, 2004). This type of week-over-week insider behavior - a flat number of buyers, a nearly 50% increase in sellers, a big jump in cluster sales and net sell inflections - coinciding with a new multi-year high for the market suggests to us that insiders are worried about valuations."