Earnings week is open season for insiders. And if you're looking for a traditionally strong strategy for trading, look no further. Insider buying is one of the most accurate indicators on Wall Street - if not the most accurate - for longer-term investors. Insiders can start buying shares after earnings are released, and their purchases help us pinpoint the companies that are the real bargains on Wall Street. For a few weeks leading into earnings, insiders are not allowed to buy shares of their own companies. This period when earnings and the accompanying information can move the shares sharply up or down is known as the "quiet period" - because insiders are prohibited from trading their own companies' shares unless it's part of a preestablished plan. So over the next few weeks, I will be on the lookout for the following: - Massive buying: I want to see insiders putting their money where their mouth is by investing six figures or more. Any executive can SAY their company is doing great... but they won't put their own money on the line unless they actually believe it.
- Cluster buying: I'm looking for at least three total insiders to buy shares, and at least two of them must be officers.
- Sector buying: I'm also looking for insider confidence in a sector. So right now, I'm looking for insiders to be buying bank stocks after the recent sell-off.
These are the strongest signals the market can send because, as the most successful fund manager on Wall Street, Peter Lynch, once quipped... "Insiders buy for only one reason: They think the shares are going higher." YOUR ACTION PLAN For our upcoming War Room Open House, Bryan and I will be looking to position ourselves on several companies as they report earnings. The best part for you is you'll have FREE ACCESS for an entire week. That's right - for five days, you'll get all our trade recommendations... without pulling out your credit card. Plus you'll join our vibrant community of traders who are all pushing for financial freedom. Click here to sign up and get a week's worth of trade ideas for FREE. |
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