Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Weekly Comic: Market insiders selling at the top to retail investors. Is the crash near?

Published 02/23/2017, 09:06 AM
Updated 02/23/2017, 09:06 AM

Investing.com - Optimism about U.S. President Donald Trump's pro-growth economic agenda has lifted U.S. equities to record high territory, with the Dow marking its ninth straight record close on Wednesday.

Overall, U.S. stocks are now up almost 15% since the election, boosted by Trump's promises of tax reform, infrastructure spending and bank regulation.

The tremendously high valuations has led to some hedge funds to bet that the rally is coming to an end, as enthusiasm over Trump's policies is overdone and political risk in Europe isn't priced in.

The level of shorts - a bet that a stock will fall - taken out against the Dow Jones Industrial Average jumped 13% in the 30 days to February 20.

In addition, the first seven weeks of this year have seen insiders selling 5.5-times as many shares as they bought, meaning that insiders are dumping shares at an aggressive pace.

This comes at a time when retail investors are jumping into the market looking to make some quick gains.

Trump has been credited with being a major catalyst behind Wall Street's impressive rally since election day, with some dubbing it the "Trump Jump", as investors welcomed his promises of tax reform, infrastructure spending and deregulation.

However, recent gains have led to speculation of a near-term reversal with some fund manager likening the current stock market euphoria to the dotcom bubble, which reached a peak on the last day of 1999 and then burst dramatically.

The question remains, who or what will be the cause of the reversal.

To see more of Investing.com’s weekly comics, visit: http://www.investing.com/analysis/comics

Latest comments

The entire market is rigged and over valued, time to run bail before the crash.
The market is overheated
every really the same question pop up, now the dotcom bubble: the expansion that began in March 1992 ended in March 2001, the nasdaq went up about 400% reaching as high as 5000 points, the last leg was around 80% increase in a few month with feds raising rates 5 time , now in November 2016 before the election we were at the same level as DECEMBER 2014 we have gone nowhere during 2 years ,we finally had a 3 month rally with a 15 % increase with the fed still unable to raise rates and this to you look like the dotcom bubble?? On top of this high increase in short position it is often a signe of a rally in the opposite direction because any little good news will make the short cover their position creating a quick move up.. Reality is ,as always, nobody knows the future! we are due for a correction and we could be going down tomorrow or it could be next year, but comparing a 3 month 15% really to the dotcom bubble it is non sense it is miss information and it just there to scare people.. .
You compare 400% on 9 years on the Nasdaq and 15% on 3 months on the DJ ! But if you compare the last 9 years on the DJ, increase is more than 300%. So yes, we can conclude there is a bubble too.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.