Markets red at any cost

Within the S&P 500 today, over 70% of the stocks are trending lower. Yes, McDonald’s (MCD) reported an 11% increase in February global comparable sales. Its U.S. comparable sales as well, printed 8.3%, topping the expected 6.5% gain, but made no difference in terms of lifting the market.

At 10 am, another positive economic release hit the wires: with January wholesale inventories rising 0.8% compared to the expected rise of 0.5%. This followed December’s 1.1% rise. Still, despite this additional economic good news : the stock market  continues posting significant losses with Dow currently red 114 points at 11.780 levels.

It seems that no matter how good of economic news we get, market forces will do what they do best, plunging it. “Shake the weak hands while we load up”. And, what I mean by that.

Usually, and we are talking in terms of cash amounts here, co. insiders do a lot more selling than buying. The main reason for this is that ; a lot of insider selling comes from company execs unloading shares of stocks they have been given as comps. This is not because their stance against their respective companies is a bearish one, rather - to be better diversified.

During the month of January, total insider purchases (NYSE) outweighed sales - the first time in almost 15 years that this has happened. What it means ? Historically, when insiders are net buyers, the market has been strong in the following 4 quarters with S&P rising an average of more than 25%. True, there are no guarantees and as they say, predicting the future is hardly a perfect science however, this fact shows that shares are excessively cheap at current valuation-even for insiders, who most likely already hold outsized positions while screaming how bad our economy is. By the way , inflation and stagflation are gaining momentum now among reports and headlines. Why we are comparing our present situation with the ’70’s crisis, is beyond me. True, CPI inflation is rising but it still (if one examines the current data), doesn’t even compare with the ‘70 inflationary levels, and I am including here CPI core, food and energy. (energy though is a bit high, but again - stagflationary pressures in today’s economy, imo isn’t showing up in the inflation data).