Technical Analysis—Insider Buying vs S&P 500

The Catalyst Insider Buying Fund (INSAX) seeks to offer investors an opportunity to invest in large capitalization U.S. companies that are experiencing significant insider buying.

The Fund only invests in companies where corporate insiders (CEO, CFO, directors, etc.) are purchasing their own company stock on the open market. We believe corporate insiders understand their own firm better than any outsider possibly could.

Note that the Gross Expense Ratio of INSAX is very high (i.e., 1.70%) and its Morningstar Rating has only one star.

Portfolio Holdings

As of 03/31/2022, the INSAX's top 10 holdings are shown below:

Credit: Charles Schwab

INSAX vs $SPX

Short Term

Figure 1. INSAX showed a strong positive correlation (+.89) with the S&P 500 recently

Long Term

Technical Analysis—Two Indexes Highly Correlated to $SPX

Figure 1.  US Finanaical Asset Managers & Rydex Bull/Bear Asset Ratio
(Source: @SuburbanDrone)

Rydex Bull/Bear Asset Ratio

!RYRATMM is 

• Rydex Asset Ratio - Bear + MM Assets/Bull Assets (NBD)

$ONE:!RYRATMM is the inverse of  !RYRATMM (or 1 / !RYRATMM) , which represents:

• Rydex Bull/Bear Asset Ratio

As show in Figure2, 1/!RYRATMM (red) and $SPX (black) have high positive correlation.

Figure 2.  Relation between 1/!RYRATMM (red) and $SPX (black; Source: stockchart.com)

US Financial Asset Managers

Asset management stocks (e.g., STT, TROW, JEF), once the bellwethers of Wall Street, fell out of favor spectacularly in 2018, with the Dow Jones U.S. Asset Managers Index ($DJUSAG) slumping 27% for the year, underperforming the S&P 500 by roughly 20%. The industry had margins squeezed from lower fees, a continuing shift toward passive products, capital expenditure on technology and increased compliance costs. To add further pain, a plethora of managers failed to beat the market, which resulted in many investors requesting redemptions.

As show in Figure 3, $DJUSAG (red) and $SPX (black) have high positive correlation.

Figure 3.  Relation between 1$DJUSAG (red) and $SPX (black; Source: stockchart.com)

Figure 4.  Margin Debt (Source: @MFHoz)