Insiders bailing on Dow 14,000

  @CNNMoneyInvest February 6, 2013: 1:42 PM ET
dow insider trading chart 2

Insider selling has jumped to levels not seen since March 2012. Click chart for more market data.

NEW YORK (CNNMoney)

Corporate insiders have one word for investors: sell.

Insiders were nine times more likely to sell shares of their companies than buy new ones last week, according to the Vickers Weekly Insider report by Argus Research.

That's the highest level of insider selling since March 2012.

And it comes just as individual investors are starting to return to the stock market.

After yanking more than $150 billion out of U.S. stocks last year, individual investors have been on a buying spree in 2013, with $17 billion flowing back in, according to the latest data from the Investment Company Institute.

Related: What's behind the bull market

With the Dow flirting with 14,000 and just 200 odd points away from a new all-time high, have individual investors missed out on the rally?

Maybe.

"In the past, this level of insider selling has been indicative of a coming downturn or at least a plateau in the market," said David Coleman, insider trading analyst at Argus Research.

The last time the Vickers index hit a level above nine was mid-March of last year. That was just before stocks closed out their best first quarter in more than a decade.

Shortly thereafter, the Dow, which had just topped 13,000, slipped below that mark and largely stayed there until late July, when stocks rallied back with a vengeance on hope for more stimulus from central bankers in Europe and the United States.

In 2011, insiders also rapidly sold out of stocks just a few weeks before S&P downgraded the credit rating of the United States.

Related: Individual investors still nervous about stocks

Insider selling isn't the only technical indicator flashing "sell."

Last week's CFTC Commitment of Traders report showed a big swing from bearish (or neutral) to bullish and that's typically an indicator of a coming plateau, or drop in the market, said Ari Wald, a technical strategist at PrinceRidge.

In the span of two months, the percentage of bullish traders jumped to 55% from 37%.

"It usually means that a lot of bullish bets have already been in place," said Wald. "It doesn't mean the market will fall apart but it looks like time to take a more neutral approach."

CNNMoney's Fear & Greed Index has also seen a big swing. The index has been in extreme greed over the past week, hitting a record high of 94 (the index only goes to 100). It has since backed off a little, but is still in extreme greed. Just a couple of months ago, it was deep into fear, hovering around 27 in mid November.

If Wald's predictions are true, that big swing may be yet another sign that a change is coming. To top of page



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