In April, U.S companies said they would buy back $141 billion worth of their own stock, the largest repurchase authorization ever for a single month. Corporate announced buybacks are now on pace to hit $1.2 trillion in 2015, nearly 40 percent higher than the previous record year.
The data from Birinyi Associates indicate that in its sixth year of existence, the single biggest factor for keeping this bull market going is the purchase by companies of their own equity. Actual investors have yanked money out of the U.S. stock market this year.
If you're a trader, the buyback activity should be looked at as a short-term bullish sign, which can be exploited through buying the stocks of companies with the biggest repurchases underway. These stocks are below.
But longer term, strategists warned this buyback bubble, which is fueled by cheap borrowing, could end badly if the Federal Reserve raises rates. And given that the last repurchase record was just before the financial crisis, it's possible this marks a bull market top.