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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA
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To: Lizzie Tudor who wrote (15308)12/4/2002 5:40:16 PM
From: Steve Lee  Read Replies (1) of 19219
 
"is not bearish to see insider selling... however it is bullish to see agressive insider buying, as we have seen this year in tech"

It is an insider's job to sell stock. That's what they are good at. It is part of the process of transferring wealth from shareholders to insiders and investment banks. You are right that it happens in good times and bad.

I also agree that insider buying would be bullish. But what insider buying are you looking at? It is anaemic.

Maybe you are confused between company buybacks and insider buying. Company buybacks are part of the process of transferring shareholder wealth to insiders and investment banks. It is not bullish. It goes on in good times and bad. It is the use of shareholder's cash to temporarily hold up the stock price. It creates demand for the shareholders to sell into. It allows the creation of stock options for insiders leading to dilution. It is a baaaad thing.

If things were bullish, companies would be spending their cash on R&D, new hires, plants and other business related investments.

The largest incidence of public companies buying the stock of other public companies occurred at the peak of the bubble.

Insider buying = bullish
Companies buying = bearish
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