Here we are refering to overall market behavior as a whole. In individual stocks, when insider sell individually, it may mean they are rechannelling their funds, but usually when key insiders sell, there may be something wrong.
What if we see a headline showing that in general?
Barry Ritholtz has an article out showing that using these headlines as your market timing tools may not be highly accurate always:
• In late 1982, as the DJIA approached 1050 –a level that had proven a barrier for 17 years– Insider Selling reached its highest (supposedly most bearish) extreme in almost a decade.
• Ironically, by the summer of 1987 corporate insiders had turned into aggressive buyers of their own stock. In fact, Insider Buying reached a record (supposedly
most bullish) level in October 1987… just one week before the 1987 Crash.
• In 1991 Insider Selling spiked as the stock market roared out of the 1990 recession and corporate earnings languished. Everyone was convinced that stocks had disconnected from reality and the insiders were right. Wrong again!That was only the first year
of a 9-year bull market run that would produce the longest period without a 10% correction.
The Big Picture | Is insider selling a concern? | Read here