Corporate CEO's are buying stock at a very high rate right now and such intense insider buying has signalled the end of bear markets. Dividend yields are now above treasury bond yields which 'again' is very very rare. Thomas Young from bankstocks.com noted that the $30 billion in toxic Bear Stearns mortgage paper the government guaranteed back in March is cash-flowing nicely. It also indicates that it may have been premature for investors to lose faith in Bear Stearns in March. As of the end of September, the market value of the Bear Stearns portfolio was $26.8 billion, compared with its original face value of $30 billion, according to a government report on October 23.
Other positives from a sentiment (contrarian investing) standpoint include:
- Put Call Ratio (investors buying more puts than calls)
- Stock/Bond Ratio (stocks undevalued compared to bonds)
- Liquidity Premium (S&P 500 ETF) SPY (aversion to individual stocks)
- New Highs/New Lows Ratio (NYSE and NASDAQ)
- Up Issues and Up Volume Ratio (NYSE and NASDAQ)
- VIX (CBOE Volatility Index)
- Rydex Ratio (money heavily in bear market fund)
- Small Trader Put Buying (small traders betting on market decline)
- Public Short Sales Ratio (public shorting stocks)
- Corporate Insider Buying (very heavy buying)
- Investors Intelligence Newsletter Survey (bearish towards stocks)
- AAII (American Association of Individual Investors)
- Speculative Trading in Pink Sheet Stocks (very low levels of speculation)
Today and tomorrow could be the washout the market needed. Plus, talk of 5 and 10 year lows is similar to 2002. Wall Street is laying off thousands (just like in 2002). Investors have pulled record amounts of money from mutual funds (just like in 2002).