Over the past two weeks, insider-transaction data from Vickers Stock Research generated worrisome sentiment indicators for Nasdaq-listed companies. This week, the cautionary signals are off the charts. Let's dig deeper.

With earnings season in full swing and the volume of insider transactions reported by Vickers Stock Research at extreme lows (as insiders are broadly prohibited from trading right now), it would be easy to say 'nothing to see here.' But there are certain items of interest in the weekly insider-transaction data from Vickers.

Last week, we noted that weekly insider-sentiment data from Vickers Stock Research was 'almost' exactly what we'd expect at the start of earnings season, with insiders cautiously positioning themselves for weeks in which they would be on the sidelines because of trading restrictions. But our 'almost' was the result of a significantly bearish one-week sell/buy ratio from insiders at companies that trade on the Nasdaq. That ratio was 13.20 on a scale where anything over 2.50 is bearish, and we wondered if insiders were concerned about a 'buy the rumor, sell the fact' response from investors once earnings reports started to flow in. Now, we can comment on what was indeed a volatile week for the Nasdaq - one that did not overly impact the broader index itself, but did feature headline-grabbing drops for some high-profile stocks.

Earnings Season: A Little Better than Expected, But...

California-based SVB Financial Group was taken over by regulators last Friday due to inadequate liquidity and insolvency; SIVB equity shareholders have been wiped out. The collapse has reverberated on Wall Street in a sharp downturn in bank stocks as investors worry about a contagion impact on the banking industry. We believe the reaction has been overblown. Silicon Valley Bank was a special situation in two ways. First, deposits at the bank accounted for about 90% of funding, versus 65% for the average bank, leaving the bank susceptible to funding shortfalls from a relatively small base of depositors. As well, the bank was deeply concentrated in holding deposits for technology start-ups, which have been unable to access the capital markets due to a downturn in capital raising and were thus funding operations by draining their deposits from prior fund raisings. While depositors with more than the FDIC cap of $250,000 will face uncertain timing on recovery of funds, we view deposits as a zero sum game. Funds pulled from one bank will be allocated to another. Banks routinely face interest-rate cycles and hold a large amount of fixed-income assets, sometimes at gains, other times at losses. But default risk is really non-existent and gains/losses are zero if held to maturity. SVB's issue was having received a large amount of deposits and having invested them when rates were very low, and then being asked for those deposits back after rates moved considerably higher -- leaving it with short-term losses. Larger banks have far better distribution among funding sources (such as a greater number of depositors and short-term borrowings). Larger banks also are subject to stringent stress tests on a range of severe economic scenarios and have abundant capital requirements. Smaller banks with large exposure to single sectors may be at risk, so we would focus on larger banks in this risk-off environment. Here is a list of BUY-rated Financial sector stocks in Argus' universe of coverage that fell sharply last week and offer value, in our opinion.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

Stocks were mostly higher in volatile trading on Thursday morning, led by the Energy and Consumer Discretionary sectors. GDP data was stronger than expected. In its advance estimate, the Commerce Department said that the U.S. economy expanded at a 2.9% annualized rate in 4Q, above the Bloomberg consensus forecast of 2.6% though down from 3.2% growth in 3Q. The Dow was flat, the S&P rose 0.3%, and the Nasdaq rose 0.7%. Crude oil rose nearly 2% to $81.50 per barrel, while gold fell $17 to $1926 per ounce.

With earnings season under way, corporate insiders mostly have moved to the sidelines as a result of trading restrictions now in force. In reviewing the current insider-trading data from Vickers Stock Research, we note that transaction volume is predictably low, with about 740 insider transactions meeting the criteria for inclusion in the current Weekly Insider Report. When insiders are not restricted, weekly transaction volume can be close to 2000.

Earnings season continues today, with reports from Exxon, Procter & Gamble, and Abbvie. On Thursday, Apple and Amazon reported better-than-expected results after the bell. The major indices rose strongly despite weaker-than-expected GDP data, as the Commerce Department reported that the U.S. economy contracted at a 0.9% pace in 2Q. On the employment front, first-time claims for state unemployment benefits fell to 256,000 for the week ended July 23, down from 261,000 a week earlier. The Dow rose 1.03%, the S&P 1.21%, and the Nasdaq 1.08%. Crude oil rose slightly to $97 per barrel, while gold rose 2% to $1773 per ounce.

Stocks rallied on Thursday, recovering from recent sharp losses as investors weighed more 1Q earnings from major companies and new GDP and employment data. The Commerce Department reported that the U.S. economy contracted at a 1.4% annualized rate in 1Q, below the consensus growth forecast of 1.1% and the first decline since 2Q20. Weekly employment data was better than expected. First-time claims for state unemployment benefits fell to 180,000 for the week ended April 23, down from 185,000 a week earlier and below the Bloomberg consensus of 184,000. On the earnings front, Meta shares rose more than 17%, despite mixed 1Q results, after the company reported better-than-expected growth in daily active users. The Dow rose 1.85%, the S&P 2.47%, and the Nasdaq 3.06%. Crude oil traded near $105 per barrel, while gold rose $8 to $1897 per ounce.

The stock market finally had a winning week, though January remains deeply in the loss column. On Friday, the Dow Jones Industrial Average rallied by 565 points, or 1.7%. The S&P 500 was up 2.43%, and the Nasdaq Composite surged 3.13%. For the week, the DJIA was up 460 points, or 1.34%, the S&P 500 was up 0.77%, and even the Nasdaq Composite eked out a gain of 0.01%. Year-to-date, the Dow is down 4.36%; the S&P 500 is off 6.93%; and the Nasdaq Composite is in correction territory, down 11.96%.

October Surprise: Recouping September's Losses

The July 19 trading week began with somber discussions of an overdue correction, and stocks wobbled - but investors bought the dip and shares raced to new all-time highs. Although stocks suffered a drubbing on Monday of that week, with the benchmark S&P 500 down 1.6% for the session, they clawed back on Tuesday through Thursday and then staged a big-finish Friday.

The stock market moved lower last week, then rallied on Friday, ultimately finishing flat-to-down. Tech stocks and blue chips performed similarly, with tech narrowly outperforming. During Friday's session, the Dow Jones Industrial Average increased 228 points, or 0.67%. The S&P 500 was up 1.09%, and the Nasdaq Composite was up 1.44%. For the week, the DJIA was down 0.46%, the S&P 500 was up 0.13%, and the Nasdaq Composite was down 0.25%. Year-to-date, the DJIA is up 11.23%, the S&P 500 is up 11.29%, and the Nasdaq Composite is up 8.76%.

The Vickers Top Buyers & Sellers is a daily report that identifies the five companies the largest insider purchase transactions based on the dollar value of the transactions as well as the five companies the largest insider sales transactions based on the dollar value of the transactions.

With earnings season now in full swing, the volume of weekly insider transactions reported by Vickers Stock Research has slowed and should remain slow for the better part of the next three weeks. Last week, Vickers processed some 898 transactions that meet the criteria for inclusion in this week's Weekly Insider Report, compared to 1720 at this time last month.