Investing Update: Insider Selling Jumps
What I'm buying, selling & watching
The S&P 500 finished the week up for its first positive week out of the past four. For the year it stands up 5.79%. The Nasdaq is now up 12.54%.
To start 2023 the S&P 500 was at 3,824. We saw it run up almost 10% to 4,179 and now it sits at 4,045. It continues to bounce off the 200-day moving average of 3,940 to remain stuck in this range. Twice it has hit the 200-day and bounced upward. Its remained range bound from around 3,900 to 4,100.
One surprising tidbit from February was that the technology sector was the only positive sector. Technology was also positive in January. I found that very interesting because if the market is going to takeoff, technology will need to play a major role.
We are about to enter two very strong months historically for the S&P 500. That includes if you go back to 1950, the past 20 years, past 10 years and pre-election years. Some excellent chart work here.
As you know I’ve written about the election cycle a couple times. Here is an updated chart from Ryan Detrick on what average S&P 500 returns looks like in pre-election years. There is usually a dip and bottoming in early March and then nice returns tend to follow. We will see if this follows suite in 2023.
Back-to-Back Down Years Are Rare
I continue to go back to how rare it is to see back-to-back down years. Especially following as steep of a drop as we saw in 2022. There is a lot of green on this chart which goes back to 1970. I’ve shown other similar charts but I really like this chart as it shows it in a very clean visual.
Where Does the Bear Go Next?
This current bear market is getting long in the tooth. As you can see below which charts all the bear market declines from peak-to-trough. We’re now in the midst of this being the third longest bear market on record. I think it’s oversold, tired and has run out of steam. So far my opinion is still proving to be wrong but I think that soon changes.
Competition For Stocks
Another headwind for stocks is the competition that bonds are now giving. Yields just continue to climb. We’re now at levels not seen since 2007. 16 years ago! When the 6-month and 1-year T-bills are yielding over 5% essentially risk-free it makes them very enticing. Which would explain why so much of the money flows have remained in bonds over stocks. Thus keeping money out of the market. To break this the market has to rally 10-15% and then you’ll see money chase back in. Until then much of that money will remain in bonds.
Fed Tightening Breaks Things
A great chart here from BofA which shows the US Fed Funds target as it creeps higher tends to usually break something. With the consensus outlook that the Fed is going to continue to raise even higher, the likelihood that something breaks again grows.
Insider Selling Jumps
In my last Investing Update: What Recession?, I discussed watching insider buying. The other side of that coin is watching insider selling. It’s now showing a large spike in the insider selling-buying ratio. Flashing the highest insider selling since April of 2021. I feel insider and buying trends are one of the more important things to monitor and a spike this high catches my attention.
Moves I’ve Made
S&P 500 Index On Wednesday of this week I added to my S&P 500 holding. As the market approached the 200-day moving average of 3,940, I decided it was a good time to buy more.
What I’m Watching
The names of some stocks that showed up on my 52-Week Low List caught my eye this week. Here are the interesting names that appeared on it.
Johnson & Johnson JNJ 0.00%↑
Pfizer PFE 0.00%↑
3M MMM 0.00%↑
Domino's Pizza DPZ 0.00%↑
Pioneer Natural PXD 0.00%↑
All of these stocks are quality companies that not that long ago were leaders in the market. As I scan for opportunities on a long-term time horizon, these are five intriguing names that I’m looking into more. Years out you can almost bank that all five of these companies’ stock prices will be much higher than they are today.
The Coffee Table ☕
Richard Quinn wrote Myths That Won’t Die on Humble Dollar. In this post he discusses the misunderstandings regarding Social Security. Very informative.
Last week Warren Buffett’s annual letter came out. I read this every year. There were some interesting quotes in it. Reading this is a reminder of simplicity and back to the basics with investing. We often make it harder than it really is. If you haven’t read the letter yet, you can here.
My wife got me a bottle of the Kentucky Owl Takumi Edition bourbon for Christmas. It’s a limited release of 25,000 bottles where they shipped a combination of Kentucky Owl’s 4, 5, 6 and 13 year-old blends to Japan where a master distiller there combined it with his Japanese blends. At $150 a bottle it’s rather pricy but this was a very good tasting bourbon. It has a unique and different taste. If you see this, it’s definitely worth the try.
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Disclaimer: This is not investment advice. You should not treat any opinion expressed as a specific inducement to make a particular purchase, investment or follow a particular strategy, but only as an expression of an opinion. Do your own research.