Insider selling at the biggest technology companies hit a record pace over the last six months even as investors snatched up shares, pushing the Nasdaq Composite Index to a 12-year high.
More than 55 million shares were sold versus 1,780 shares bought for a sell-buy ratio of an eye-popping 31,109 to 1 at the 10 biggest tech companies, including Microsoft, Oracle and Qualcomm, according to Alan Newman, editor of the Crosscurrents newsletter and market analyst for 49 years.
"Insider activity confirms the rosy scenario indicated by prices is only an illusion," wrote Newman in his latest letter. "Insiders have no confidence in their own companies. While prices appear to be indicating an all clear, we remain in one of the most egregiously speculative phases ever seen."
In fact, insider selling's track record as a leading indicator has been mixed. Large amounts of selling by executives have taken place during long and vigorous rallies in the past. Plus, tech companies pay a lot of employees in options or stock grants, skewing the selling numbers for that sector in particular.
Still, should the numbers getting this massive raise red flags for new tech investors?
Those new investors were burned Thursday as Microsoft and Intel got slammed after research firm 11 percent last quarter. The Nasdaq retreated from its high as the rest of the market held firm.
"I don't give this too much weight," said Michael Murphy of hedge fund Rosecliff Capital. "I believe this is simply execs trimming their holdings. This doesn't speak bullish or bearish for the market; it speaks more to the recent rally we've had."
Still, Newman said the selling did hold some predictive value in a few instances.
"Insider sales at Apple were one of the reasons we turned bearish on the company late last year," he said. "Clearly, they [executives] made the right call."
Apple's stock is down 30 percent since Newman's sale recommendation in October.
(Read More: What to Expect from Apple Earnings)
He also points to a sale by a Netflix executive at the end of January. The shares are up just 2 percent since that sale and down 5 percent in the past month.
"If the consistent mass exodus of insiders at Nasdaq's darlings tell us anything at all, it screams that the group is hugely overpriced and the future is nowhere near as bright as the Federal Reserve is attempting to engineer," Newman wrote.
Tech investors hope executives are just cashing out for routine life-planning purposes, but this surge seems anything but routine.
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