MW Odds are good that the stock market has finally bottomed. Here's why.

By Michael Brush

Insiders, sentiment, consumers and economists suggest its time to buy the rebound

No one can predict the stock market's exact bottom or top. But at some point, the clues from insider buying, investor behavior, and thoughtful analysis of the issues start to accumulate to support a market call.

We are there. The U.S. stock market may not have put in the absolute low of this most recent downturn. But it's time to put aside your fear, uncertainty and doubt - and buy stocks. The worst of the recent market storm appears to be behind us. Here are four reasons why, and three stocks that insiders especially like:

1. The U.S. is not headed into a recession: Investors are selling stocks because they worry a recession is coming. They're going to be wrong. Stocks will resume an uptrend once this becomes more obvious. That's the message we're getting from economists, consumers and corporate-insider buying.

First, the economists. Goldman Sachs economist Jan Hatzius said reports of a U.S. economic slowdown are "greatly exaggerated." Employment indicators are holding up, for example. That's key, because consumers drive the U.S. economy, accounting for two-thirds of GDP.

Tariffs are going to be a problem. They hurt economic growth in three ways, Hatzius wrote in a recent research note. Tariffs are a consumer tax so they lower incomes and spending power. Tariff uncertainty makes companies and banks less willing to invest and lend. Hatzius recently reduced his 2025 U.S. GDP growth forecast to 1.7% from 2.4%, citing tariff damage.

President Donald Trump seems fixated on imposing tariffs. That might change if polls show voter displeasure with his economic policies, which could cost Republicans control of Congress. Voter polls are already starting to move in that direction.

Like Hatzius, Bank of America economists think the jobs market remains strong enough to keep the U.S. out of recession. Income growth continues to outpace inflation, they noted.

Jim Paulsen, who writes Paulsen Perspectives on Substack, predicted this soft patch in the economy several weeks before it happened. He's still cautious, but he is not expecting a recession.

Ed Yardeni of Yardeni Research said that a fair amount of recent labor-market and consumer-spending softness was due to severe cold weather. Yardeni recently raised his subjective odds of a recession to 35% from 20%. But he is still betting on the resilience of the economy.

2. When times get tough, the tough go shopping: U.S. consumer sentiment has plunged, according to the University of Michigan Survey of Consumers released March 14. But consumers haven't really changed their shopping behavior. That was the key takeaway from a Bank of America retail-sector conference in Miami last week. "Thus far, sentiment seems to have shifted more than behavior," Bank of America analysts concluded in a March 13 note. Walmart $(WMT)$ executives, for example, said at the Miami conference that it "has yet to see material changes in how consumers are actually behaving and spending," Bank of America reported. Spending at leisure companies is also holding up, it reported.

3. Insiders are buying again: After staying sidelined for the past several months, corporate insiders have stepped up to buy over the past two weeks. Notably, there have been many $1 million-plus purchases, which is unusual. Insiders with strong records who are buying in size are most interested in cyclical areas including energy, technology, banking and industrials. This suggests they don't see a recession coming.

A weekly sell-buy ratio tracked by Vickers Insider Weekly last week fell to 1.71. Any measure below 2.0 represents a buy signal. Vickers notes that buying was particularly strong among energy, materials and consumer discretionary companies, all cyclical areas.

4. Sentiment has turned quite dark: Investor sentiment is a valuable contrarian indicator; it's often worth betting against the crowd. Right now, the crowd is extremely negative. This tells me it is time to buy.

-- The Investors Intelligence Bull Bear ratio last week fell to 0.8. This indicator sends us an unequivocal buy signal whenever it falls below 1.0, history shows.

-- The American Association of Individual Investors survey also flashes a buy signal because bears have exceeded bulls by more than 10 percentage points for four weeks in a row.

Here are three companies that have seen some of the most compelling insider buying:

1. Wynn Resorts( WYNN): Wynn Resorts operates the Wynn Las Vegas, Encore Las Vegas and Encore Boston Harbor casinos. It also owns the Wynn Macau and Wynn Palace in Macau in China. The company is expanding with the construction of the Wynn Al Marjan Island in the United Arab Emirates, scheduled to open in early 2027.

Despite the growth prospects, Wynn Resorts' stock trades at a steep discount, in part due to worries about the economy and consumer confidence. The stock trades at a 50% discount to its average trailing five-year price-to-sales ratio, and forward and trailing p/e ratios, according to LSEG.

The insider buying: Two directors purchased $2.2 million worth of stock in mid-February at around $92 per share.

2. Victoria's Secret $(VSCO)$: Victoria's Secret in December reported solid sales growth of 7%, but guidance was poor. The iconic brand in what's known as "women's intimate apparel" predicted flat sales growth this year. This is one reason the stock has been in a spectacular free fall to the $19 range, from close to $50 in December.

The stock trades at a 48% discount to its trailing five-year price-to-sales ratio, which makes this a value play. Management is taking steps to revive the brand and build it out in "lifestyle categories" such as beauty and sports.

The insider buying: An investment shop called BBRC International in early March bought $17.3 million worth of stock at $17. BBRC is an "insider" because it owns a large position. What's interesting is BBRC sold $16.4 million worth of this stock at $46 back in February of 2023. Insider reversals are bullish.

MSCI $(MSCI)$: MSCI offers data and analytical software tools to exchange-traded fund $(ETF.AU)$ and portfolio managers, who use the tools to track performance and risk, analyze portfolios and companies, and implement strategies. MSCI licenses its indexes to money managers, which use them for performance calculations in marketing. MSCI's brand power earns it a wide moat rating, according to Morningstar analyst Rajiv Bhatia.

As a market-related company, MSCI's stock often falls when the market pulls back, and when there is a perceived risk of recession. Both would lower portfolio returns and assets under management, which would cut into clients' ability to buy products.

The insider buying: MSCI Chief Executive Henry Fernandez said the selling is overdone. He recently bought $3 million worth of stock at $570 to $576, a discount from the stock's price of around $640 last December. That's a nice sizable buy. I also give extra weight to CEO purchases.

Michael Brush is a columnist for MarketWatch. At the time of publication, he owned VSCO and MSCI. Brush has suggested WYNN, VSCO and MSCI in his stock newsletter, Brush Up on Stocks. Follow him on X @mbrushstocks.

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-Michael Brush

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March 20, 2025 07:35 ET (11:35 GMT)

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