Insiders are selling. Penny stocks are half the volume. Robinhood margin is maxed. Vaporware IPOs are mooning. FinTwit is euphoric. What could go wrong?

by

The surface looks euphoric. Underneath, it’s leaking pressure. U.S. equity markets are flashing signals that don’t line up. On one side, retail traders are piling into penny stocks, margin debt is hitting new highs, and social media is pumping vaporware IPOs like it’s 2021 again. On the other side, corporate insiders are quietly heading for the exits.

Start with the volume. Penny stocks now account for nearly 50 percent of daily trading volume on U.S. exchanges. That’s not a typo. That’s a structural shift. These are not companies with earnings. Many are not even companies with products. But they are liquid. And they are moving. Fast.

Robinhood’s internal margin data shows retail leverage at record levels. The average margin balance per active user has climbed to $4,720, up from $3,100 just six months ago. That’s a 52 percent jump. The platform’s margin utilization rate is now over 81 percent, the highest since its IPO. This is not cautious optimism. This is full throttle.

Meanwhile, IPOs with no revenue and no product are mooning. One example is Voyager Technologies, which surged 312 percent on its first day of trading. The company’s only asset is a prototype satellite that has not left the ground. Another, Zeo Scientifix, doubled in 48 hours on a press release about “future AI-enhanced materials.” No product. No revenue. Just narrative.

While retail is buying, insiders are selling. According to HedgeFollow and OpenInsider, insider selling in June has already crossed $9.3 billion, the highest monthly total since November 2021. Executives at Robinhood, Nvidia, and Palantir have all filed Form 4s showing multi-million dollar sales. At Robinhood alone, insiders have sold over $488 million in the past 12 months.

This is not a coincidence. It is a divergence. When insiders sell into strength, it’s not because they need the cash. It’s because they see the top. Or at least, they see the risk.

FinTwit is max bullish. Sentiment trackers show retail positioning at its most aggressive since the meme stock era. Call option volume is up 38 percent month over month. The most popular tickers on Reddit’s r/wallstreetbets are all sub-$5 stocks. The crowd is not cautious. The crowd is convinced.

This is how tops form. Not with fear. With euphoria. With leverage. With vapor. With insiders walking out the back door while the crowd rushes the front.

Sources

https://hedgefollow.com/insider-trading-tracker

http://openinsider.com/insider-purchases

https://www.marketbeat.com/stocks/NASDAQ/HOOD/insider-trades/