With the S&P 500 trading at ~3,600 (down about 25% from the highs), do market insiders believe that today's prices represent an attractive entry point?

By Brad G Grounds

As I write this post today, the S&P 500 is trading in the 3,600s.  The S&P 500 has declined by 25% (and the NASDAQ is down even more), and many "talking heads" and other pundits are calling for a recession.  

With this in mind, I thought it would be a good idea to check with people who actually know what they're talking about - the top executives at all publicly traded companies on US exchanges.  

I have previously discussed in detail about the remarkably strong evidence that the collective intelligence of market insiders is able to identify market bottoms with incredible accuracy.   Hence, I will skip any background explanation of either my method or the historical accuracy and support for the metrics that I cite below.

Market Insiders Have Already Given A Buy Signal (though it is weak)

As I sit here today on June 17, 2022, I cannot comment directly on the feelings of market insiders (i.e., the top executives actually running all of the publicly traded companies listed on US exchanges) today.  However, evidence suggests that there is at least semi-strong conviction by insiders at today's prices, because an insider trading signal was generated on May 20, 2022 (when the S&P touched 3,810 on an intraday basis).

Consider the chart below.  Disregard the x-axis for a moment, as I didn't format it well.  
  • This squiggly blue line reflects the closing price of the S&P 500 index from 2003 (on the far left) until June 2022 (on the far right).  
  • The vertical bars that appear at certain dates on the graph reflect dates on which an insider "buy" signal was generated based on the aggregate open market purchases by all corporate officer insiders on a particular day.  Note that these events always occur after there has been a substantial decline in the market.  Note, too, that they almost always reflect the bottom - or very near bottom - of the market for that period of time.
  • The vertical bars at the far right side of the chart, for instance, represent the bottom of the COVID market crash.  Insiders generated multiple buy signals across multiple days during this period.  Recall that market participants were losing their minds at this time and selling at PRECISELY THE WRONG TIME.  But not so for corporate insiders - they were BUYING at PRECISELY THE RIGHT TIME.
  • Insiders have just made another such signal.  BUY.


Guess what?  We had an insider buy signal on May 20, 2022, when the S&P briefly hit 3,810.  I think the odds are good that we'll see that another buy signal was generated on June 16, 2022 (when the market was down 3%+ and the S&P 500 broke into the mid-3,600s).  

Time will tell, but insiders have historically been EXCEPTIONALLY good at calling market bottoms.  I won't be betting against them!



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About the Author

My name is Brad G Grounds, and I am an attorney (but see the important disclaimers above).  I've been following, studying, and analyzing trades made by corporate insiders for years.  I maintain an insider trading database, which contains all of the insider trades reported in the SEC's EDGAR database going back to 2003.  My database is updated regularly and contains millions of transactions.  Out of those transactions, I sift through for only those reflecting open market purchases or sales.  These transactions - which still number in the millions - are the basis for the analysis presented on this site.  


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