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Welcome to edition 509 of Insider Weekends. In our last edition we mentioned how for the first time in nearly 10 years we saw insider buying outpace selling and wrote the following,
We have been tracking insider data for nearly 10 years and in all this time we have not come across a single week where insider buying outpaced insider selling. The rapid drop in the markets over the last few weeks that saw the volatility index (VIX) jump to 75 last Thursday (the peak during the 2008-2009 Great Recession was 79) also caused insiders to start buying their own stocks at an accelerated pace.
We have been bearish for several weeks now and have written about showing restraint despite the insiders stepping up their insider buying because insiders as a group generally tend to be optimistic about their own companies, sometime buy to “signal” the market and like value investors often tend to be early.
The market continued its decline last week but the volatility index or the “fear index” (VIX) also declined, indicating there was some exhaustion of the fear we were experiencing in the market. With the U.S. surpassing all other countries, besides China and Italy, in the number of confirmed COVID-19 cases, the news is likely to get worse over the next few days. On account of inadequate testing and lack of preparation, the number of cases in the U.S. is potentially significantly understated.
The State Department’s strong recommendation to all U.S. citizens to return home unless they want to stay out of the country for an extended period combined with one of the largest long-haul airline, Emirates’, decision to suspend all passenger flights to all locations, points to a potential nationwide shutdown in the U.S. in the next few days or weeks. This is in keeping with what we saw in China and Italy where local counties/provinces shut down first, followed by large regions and then the entire country. The San Francisco Bay Area was already in a lock down for several days before all of California went into a lock down. The streets of San Francisco are eerily empty.