US transportation insiders jump ship

As we noted in our April 24th US market update for INK subscribers, transportation industry insiders are not along for the stock market's trip to new highs. Indeed, as the market sets sail in search of new highs, transportation industry insiders have completely jumped ship. Given the group's savvy ability to spot both opportunity and adversity last year, it is worth reiterating the message they are sending now.

As stocks set sail in search of new highs, transport insiders aren't on board

Our US Transportation Indicator which tracks the number of stocks with key insider buying verus those with selling has fallen to zero. That is as low as it can go. It signifies that there have been no stocks with key insider buying over the past 60 days. If the indicator's path from last year is anything to go by, this could be spell trouble for the markets in the weeks ahead.

Transport insiders sold high and bought low last year. Now they are out.

Last fall, the indicator bottomed below 20% right around the time the iShares Dow Jones Transportation ETF (IYT*US) set a 52-week high of $209.43 on September 14th. In the months that followed, the IYT shed 25.5% to set a 52-week low of $155.24 by December 24th, right around the time sentiment peaked above 80%.

With trailing P/E's for the average large cap stock in the United States at around 22, hitching a ride on the market's voyage to the land of new highs is not cheap. Perhaps the destination for those on board will end up in a better spot than last year. Meanwhile, transportation insiders have headed in another direction.

This post first appeared on INKResearch.com.