New York, New York (PressExposure) February 28, 2012 -- There is a key indicator that is flashing a red warning sign, according to Michael Lombardi, lead contributor to Profit Confidential, and that is heavy insider selling, as he describes in his recent article Corporate Insiders Bailing Out of Stocks on February 16, 2012. Insiders consist of officers, directors and the largest shareholders of corporations.
"The ratio of insiders that are selling their shares is at a pace not seen since July 2011," says Lombardi. "If you remember, the market proceeded to fall dramatically in August, September and October of 2011."
Lombardi believes it is critical to follow whether insiders are buying or selling their company's stock, as it could be an indication that they expect to see their company's stock rise or fall in price.
"Right now, for every 100 shares corporate insiders bought, 577 shares were sold by insiders of the company," says Lombardi. "If companies listed on the New York Stock Exchange are taken in isolation, this key indicator gets worse at 8.2-to-1."
Lombardi says that this number is best viewed when compared to November of 2011, before the over 25% market rally began. At that point, Lombardi says that for every 100 shares insiders bought, only 81 shares were sold.
Insider selling, in isolation, cannot be the sole key indicator on which a buy-or-sell recommendation can be made, according to Lombardi. "These numbers confirm the bear market trap that is currently playing itself out with this market rally. It seems that, while a few people were buying in January's market rally, the smart money was selling into this market rally."
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it "begged" its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
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Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi's current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six