Investors Are Back … So Expect a Correction

Individual investors are moving in.  And the smart money is moving out.

With the Dow Jones Industrial Average pushing past 14,000, individual investors jumped back into the stock market, it looked like happy days were here again.  But were they really?

When average investors are pouring money into the market, it’s a sign that a correction, or even a bear market, is coming.  Likewise, when corporate insiders are selling their shares, look out below.

Individual investors have pulled more than $150 billion out of U.S. stock mutual funds since 2009, but they were coming back in January with a net investment of $10.3 billion.  Include exchange-traded funds and a record $77.4 billion was invested in January, according to TrimTabs Research.

Conversely, there were more than nine insider sales for every buy last week, among insiders whose stocks are listed on the New York Stock Exchange.

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