Company insiders have been buying, almost without pause, since last September, when their confidence foreshadowed a prompt recovery from last summer's brutal correction. Much as we've enjoyed the trend, we knew it couldn't last.

Now, with the 10th-of-the-month filing deadline (insiders are required by the

Securities and Exchange Commission

to file evidence of their trades by the 10th of the following month) still a few days off, we are seeing clear signs that the high level of insider buying has peaked. While our monitoring of significant insider activity is still uncovering some compelling insider buys, these are increasingly focused on the small-cap and micro-cap issues.

Among the mid-cap to large-cap stocks, on the other hand, insider selling is becoming increasingly prevalent. The casual dining industry, for example, a group that until very recently showed strong insider support, is once more contributing a fair share of insider sales, with


(WEN) - Get Report


Outback Steakhouse


being two prime examples.

This much is certain: Insiders are adopting a more aggressive stance toward profit-taking. While that's understandable, our concern is that the increased selling cannot entirely be explained away as the result of insiders locking in gains. We are beginning to see a disturbing increase in the number of companies at which insiders are selling at relatively low prices.

Consider, for example, the recent selling at perennial insider-follower favorite



. Keep in mind, insiders have long supported this issue -- quite convincingly, we might add, even despite some rather lackluster performance. So it is not encouraging to find them jumping ship now.

We've also noticed insiders at

American Power Conversion


settling for lower share prices. Executives at the company remain significant holders; however, they have been selling shares well off the stock's peak of $25 a share earlier this year. Even more striking are the recent Form 144 filings by the insiders at

Borders Group


, indicating their intention to sell shares in the $16 to $17 range. Keep in mind, a number of these same individuals previously sold shares at $26 to $31 per share.

Before we get carried away, none of this means that insider sentiment has defected entirely to the bearish camp. Should the data continue moving in this direction, however, we would be a bit concerned. Our eyes are peeled, for example, for evidence that the long-bullish insiders in the cyclical issues are locking in their recent gains. Maybe even more discouraging would be continued evidence that insiders are willing to sell shares of underperforming or beaten-down stocks. Clearly, too much of either would put us on the alert for hints of something more than an average stock market correction.

Alan Greenspan's

recent comments appear to have rejuvenated the stock markets. Even so, we are fairly certain that for now, at least, insiders are ensuring themselves a cushion. The implication may well be that the upside in the overall stock market is limited.

The overall trend in insider trading merits close scrutiny in coming months, especially should the market prove weak as the summer advances. That's because the overall insider reaction to any market correction will add valuable clues to its potential severity and duration. This is no time to panic, but rather for increased vigilance on the insider front.

Bob Gabele has been tracking and analyzing insider trading since 1978, most recently for First Call/Thomson Financial. This column is not meant as investment advice; it is instead meant to provide insight into the methods of insider trading. At time of publication, Gabele held no position in any of the companies discussed in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Gabele appreciates your feedback at