Dow Futures Rise But Jeff Bezos’ $3 Billion Dump Flashes ‘Warning Sign’

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Dow Futures Rise But Jeff Bezos’ $3 Billion Dump Flashes ‘Warning Sign’
  • Dow Jones Industrial Average (DJIA) futures pushed higher on Thursday.
  • Jeff Bezos sold $3.1 billion in stock this week.
  • A flurry of insider selling since July signals a “warning sign” for the markets.

The stock market looks set to eke out a fifth-straight day of gains on Thursday. Dow Jones Industrial Average (DJIA) futures were up 49 points in premarket trading.

But after a strong week on Wall Street, there are some warning signs flashing. Not least, Jeff Bezos just dumped $3.1 billion Amazon shares.

Insider selling of this magnitude is often a “warning sign” according to Jonathan Moreland, director of research at InsiderInsights, speaking to Bloomberg last month.

I’m not prepared to say everybody should sell everything and short the market because of the recent insider data. The way I’m using it is, I’m more comfortable selling some of my winners. We still don’t trust the market’s recent recovery.

Video: why is Jeff Bezos selling so much stock?

Bezos isn’t the only one offloading shares at these levels. More than 1,000 corporate execs sold shares in the July rally.

Dow futures point to fifth day of gains

Traders are keeping the party going this morning after yesterday’s strong session. Dow futures were up 55 points (0.2%) on Thursday morning.

S&P 500 futures were up 0.1% while Nasdaq futures trailed the pack, up just 0.05%.

Jeff Bezos unloads $3.1 billion stock

Bezos picked a good moment to sell. Amazon stock is at a record high, having soared almost 70% since the start of the year. The Amazon boss has now cashed out a total $7.2 billion this year – more than double what he sold in 2019.

He’s not alone. Morgan Stanley’s CEO James Gorman cashed out $8 million in shares last month. BlackRock’s Larry Fink sold $24 million. More than 1,000 insiders (corporate execs and and board members) offloaded stock in July.

Insider selling soared in July. Source: Bloomberg

And the ratio of insider selling is pretty shocking. 24 million tech shares were sold by insiders in July. Only 4.2 million were purchased. This 5-1 imbalance has only happened twice before in the last 30 years.

Is this bad news for the stock market?

As Moreland explained, it’s not a case of “selling everything” but it could be a warning sign. Insiders know their companies better than anyone else and their activity can often signal market tops and bottoms.

nine-year high as the stock market hit its lowest point. Megan Horneman, director of portfolio strategy at Verdence Capital Advisors explains:

When insiders are buying, they think their companies are well undervalued.

The opposite it also true. If they’re selling, they might think the stock is overvalued. And when 1,000 are selling at the same, maybe the whole market is overvalued.

Dow Jones spotlight today

All eyes are on Congress again as lawmakers work towards a second relief package agreement. Republicans and Democrats both hope to reach an agreement by Friday. Speaker of the House of Representatives Nancy Pelosi struck a cautiously optimistic tone after yesterday’s session:

I feel optimistic that there is light at the end of the tunnel, but how long that tunnel is remains to be seen.

White House chief of staff Mark Meadows was less positive, claiming the two sides were still “trillions of dollars apart.”

Elsewhere, investors will be watching this morning’s unemployment data. Analysts are expecting another 1.42 million initial jobless claims, bringing the total to 55 million since the crisis began.

Samburaj Das edited this article for CCN.com. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

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