January 24, 2022 - Canadian insiders are buying as fears rise in markets over the potential path of monetary policy. Our INK Indicator now stands at 127%, a level not seen since mid-July 2020! At 125%, there are 1.25 stocks with key insider buying for every one with selling. The jump in sentiment is good news over the medium term, but in the short term, it likely reflects some persistent downward momentum in stocks. Consequently, it would not surprise us to see some more weakness ahead.
Once our indicator peaks, we will have seen peak insider buying which can often take place near significant share price support levels. At this point, we have TSX stocks on watch for a potential upgrade to undervalued.
Buying in consumer stocks has been leading sentiment higher recently. We will be keeping a close eye on the group this week to see if any consumer names hit our screens in the Sunny or Mostly Sunny INK Edge categories. However, many firms have insider trading blackouts in place until after earnings are released, so it may be slim pickings for signals among larger stocks for the next few weeks.
Insider sentiment in the Energy sector is also catching our attention as it remains elevated at over 100%. As such, we have it on watch as well for a potential upgrade to undervalued.
While the investing seas may be a bit rough over the next little while, Canadian insiders show few signs of abandoning ship.