Musk dumped stocks on a massive basis and more than 1,300 internal and external executives snapped up

Elon Musk and Mark Zuckerberg have been selling their own company stock, but that doesn't mean many company insiders are following suit, quite the opposite.

Over the past 30 days, more than 1,300 internal and external executives have been snapping up shares of their own companies, the highest level since March 2020. At the same time, the number of sellers remains below this year's monthly average.

In a market where their share price has doubled in 21 months, their willingness to jump can be seen as a vote of confidence in their business. Insiders have proven their predictions in the past: their buying correctly heralds a bottoming out of the March 2020 bear market. While the current scale of acquisitions is far from as strong, there is evidence that those who know best about the health of businesses see profits as profitable.

Analysts say it's surprising that so many insiders will buy it given the market is at a high level. For individual companies, what corporate insiders see is a strong future, which is a sign.

While the sale of shares by billionaires such as Musk and Zuckerberg has attracted attention, insider selling shares has remained relatively modest. In the past month, there were fewer than 2,400 sellers, down from the average of about 2,500 in 2021.

Cash-outs have risen compared to the previous two years, in part because Democrats have proposed tax increases on the wealthy to pay off President Joe Biden's economic agenda. While high stock prices are undoubtedly one of the reasons insiders are selling shares, taxes could be another reason.

At a time when the Fed is turning hard for the first time in three years, straining investors, the data could help alleviate some of the anxiety. Corporate performance has provided a key underpinning for this bull market, and corporate performance continues to exceed expectations at an unprecedented rate, overcoming obstacles ranging from commodity inflation to supply chain bottlenecks.

Analysts say insider buying could cement a bull market for individual stocks, but investors should be careful not to see this as a green light to double their bets on the broader market. At this inflection point, it should be aimed at companies, and investors should not view the overall average index as a sign of upside based on this sentiment indicator.