Heads Up: Insiders Now Own Nearly 50% of Bruker
As investors await the so-called "Santa Claus rally", a "steady-as-she goes" stealth rally of sorts has been going on under our noses. Take a look at this 3-month chart of the SPDR Dow Jones Industrial Average ETF (DIA) , which not only shows the price movement but the alarming volume statistics.
Look at the huge volume spike after the November elections followed by anemic volume ever since. In fact, as the Dow Jones Industrial Average has been rising, the volume has been falling lower. From a technical perspective, that is ominous, especially this time of year.
Now take a look at the Relative Strength Indicator , which appears to be in the overbought area and appears to be breaking down.
The widely used RSI is a momentum oscillator that compares the strength of gains against the strength of losses over a given period. RSI always ranges between 0 and 100. Values below 30 and above 70 are typically taken as oversold and overbought, respectively.
A strengthening RSI indicates that gains are tending to dominate losses. Once the RSI climbs above 70, however, the sustainability of the gains is called into question. With the Fed's quarterly meeting and press conference tomorrow (12:15 pm EST, Dec. 12) and the lackluster volume Tuesday, I smell a correction in the wind.
Perhaps that's one of the reasons why the deep-discount retailers like Dollar General (DG) and Family Dollar (FDO) fell so much on Tuesday on spectacular volume. Are they the "canaries in the coal mine"?
With the present downside market risk, if you're looking to make a stock purchase, you might want to consider companies where the insiders are piling into shares in an unusually optimistic manner. One such company is Bruker.
This innovative company designs, manufactures, services and sells proprietary life science and materials research systems worldwide. Tuesday shares jumped 2% on almost 50% higher-than-normal volume. One reason is that investors are learning that the CEO Dr. Frank Laukien and two of his relatives who are company directors own a combined total of almost 73,161,000 shares of BRKR.
In fact, the total percentage of the outstanding shares owned by insiders and 5% owners is an astounding 49%! Looking at recent purchases by this elite group since Sept. 14, 2012 (the most recent purchase being last Friday, Dec. 7) I noticed that the Laukiens' purchased 250,000 shares between the price of $13 and Dr. Laukien's purchase on Friday of 50,000 shares at $13.97.