Earnings season is underway, and it gets into full swing starting next week.

Last week it was the banks reporting earnings, and this week it was two bellwethers: Tesla and Netflix.

So far, earnings have come in ahead of expectations for around 80% of companies that have reported.

Granted, the bar has been lowered as many are calling for a slowdown in growth.

Earnings aside, it’s also open season for insiders.

And if you’re looking for a traditionally strong strategy for trading, this will be an important week.

In fact, the next few weeks could be the most exciting weeks for those who follow insider buying… which is one of the most accurate indicators on Wall Street – if not the most accurate – for longer-term investors.

Insiders can start buying shares after earnings are released, and their purchases will point the way to the companies that are the real bargains on Wall Street.

For a few weeks leading into earnings, insiders are not allowed to buy shares of their own companies. This period when earnings and the accompanying information can move the shares sharply up or down is known as the “quiet period” – because insiders are prohibited from trading their own companies’ shares unless it’s part of a preestablished plan.

So over the next few weeks, I will be on the lookout for the following:

1. Massive buying: I want to see insiders putting their money where their mouth is by investing six figures or more. Any executive can SAY their company is doing great… but they won’t put their own money on the line unless they actually believe it.
2. Cluster buying: I’m looking for at least three total insiders to buy shares, and at least two of them must be officers.
3. Sector buying: I’m also looking for insider confidence in a sector. So right now, I’m looking for insiders to be buying bank stocks after the recent sell-off.

These are the strongest signals the market can send because, as the most successful fund manager on Wall Street, Peter Lynch, once quipped: “Insiders buy for only one reason: They think the shares are going higher.”

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