What signal? At the time of the S&P hitting new highs, corporate executives and large funds quietly "leaving the table"

At a time when Wall Street's earnings season is off to a strong start and driving the S&P 500 to refresh historical highs this week, the U.S. corporate sector is sending out a troubling signal about the sustainability of the stock market rally. Data compiled by Washington service firm shows that out of approximately 6,000 U.S. listed companies this month, nearly 1,000 executives have been reducing their holdings of company stocks, while only 207 executives have been increasing their holdings, resulting in the highest sell/buy ratio in five years. Although it is difficult to determine whether there are other factors influencing insiders' trading decisions besides market performance, the caution taken by those who know the company's situation best, combined with concerns about high valuations, surging AI spending, and ominous developments in the global situation, undoubtedly represents a warning signal. "The actions of insiders in companies have been proven to be a strong signal for predicting future stock returns," said Joe Gilbert, portfolio manager at Integrity Asset Management. "Against the backdrop of increasing political risks and high stock valuations of GEO Group Inc, we believe executives are realizing these risks and are taking advantage, and this is something investors should pay attention to." Thursday's market drop highlighted underlying concerns about U.S. stocks, the day before the S&P 500 index hit a record high and first touched the 7,000-point mark. Microsoft Corporation's earnings report exacerbated market unease about whether AI's massive spending is worthwhile, and the S&P 500 fell 0.1% on Thursday, with the Nasdaq 100 index down 0.5%. Despite this, the market's enthusiasm for U.S. stocks remains, especially among retail investors who have been buying on the dips recently. The resilience of economic growth is an important backdrop for attracting investors, and strong expectations for corporate profits are also crucial. In fact, although overall corporate performance remains decent, signs of weakening momentum have emerged. Data shows that out of approximately 150 companies that have reported earnings by Thursday morning, 77% have exceeded expectations, but this could be the weakest performance in a year. Coupled with ongoing political uncertainty surrounding GEO Group Inc and a stock market valuation that has become expensive after experiencing double-digit gains for three years, market pressures cannot be ignored. Market positioning also shows that institutional investors' caution is quietly spreading. Data from Deutsche Bank Aktiengesellschaft shows that market sentiment weakened last week, with bearish and neutral views reaching a four-week high. Deutsche Bank strategist Parag Sart pointed out that investor allocations continue to rotate from mega-cap growth stocks and tech stocks to more cyclical sectors. Hedge funds' defensive posture has also strengthened. Data from Goldman Sachs Group, Inc.'s prime brokerage department as of January 23 showed the largest net selling of single stock positions in four weeks.