American companies have seldom spent more money than they are now buying back shares. The same can’t be said for their executives.

A total of 7,181 insiders bought their own stock this year through Sept. 12 and 23,323 sold shares, according to data compiled by Bloomberg and Washington Service. The ratio of buys to sells is near the lowest since 2000. At the same time, corporate repurchases reached $275 billion in the first half of the year, the second busiest since S&P Dow Jones Indices began tracking the data in 1998.

Share purchases by executives are becoming rarer after seven straight quarters of advances pushed valuations in the Standard & Poor’s 500 Index to a four-year high. While companies are pouring money into their own stock because they have nothing better to do with it, officers and directors aren’t -- and that’s a bearish signal for share prices, said Brad McMillan, chief investment officer at Commonwealth Financial Network.

“It doesn’t say anything very good about the growth prospect for the business,” McMillan, whose firm oversees $86 billion, said in a phone interview on Sept. 18 from Waltham, Massachusetts. “Who would know the business better than an executive in the middle of it? Even executives are buying on the corporate level, their hearts are not in it personally.”

Insiders buying stock have dropped 8 percent from a year ago, poised for the fewest in more than a decade, according to data compiled by Bloomberg and Bethesda, Maryland-based Washington Service. Monsanto Co. and Cisco Systems Inc. are among companies whose executives have done less buying even as corporate repurchases increased.

Gains in the S&P 500 including last week’s 1.3 percent advance have pushed the benchmark index for U.S. equities to about 18.2 times annual earnings, the highest since March 2010, data compiled by Bloomberg show. The gauge has closed at records more than 30 times in 2014 and posted annual returns of 24.4 percent since March 2009, compared with 26.3 percent in the last five years of the 1990s Internet bubble.

David Fuller's view

This suggests waning confidence among insiders regarding profits, where the upside is often overly dependent on corporate buyback programmes.

Weak commodities indicate slowing GDP growth, and a sharp rebound back above the psychological 500 level is necessary to indicate a downside failure from the currently technical oversold position.   Wall Street understandably has an Alibaba float hangover and more IPOs are in the pipeline.  The Russell 2000 Index remains ‘canary in the coalmine’ in terms of Wall Street’s overdue 10% plus correction.

See also: Small-Cap Selloff Leaves Fewer Stocks Shouldering Rally.