Here we are refering to overall market behavior as a whole. In individual stocks, when insider sell individually, it may mean they are rechannelling their funds, but usually when key insiders sell, there may be something wrong.
What if we see a headline showing that in general?
Barry Ritholtz has an article out showing that using these headlines as your market timing tools may not be highly accurate always:
• In late 1982, as the DJIA approached 1050 –a level that had proven a barrier for 17 years– Insider Selling reached its highest (supposedly most bearish) extreme in almost a decade.
• Ironically, by the summer of 1987 corporate insiders had turned into aggressive buyers of their own stock. In fact, Insider Buying reached a record (supposedly
most bullish) level in October 1987… just one week before the 1987 Crash.
• In 1991 Insider Selling spiked as the stock market ...
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