Weekly Comic: Market insiders selling at the top to retail investors. Is the crash near?
Investing.com
Published Feb 23, 2017 09:06AM ET
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
Get The News You Want
Written By: Investing.com
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.