The Odds Are Good That the Stock Market Has Finally Bottomed Out. Here’s Why

No one can accurately pinpoint the precise highs and lows of the stock market. However, certain indicators—such as insider buying, investor sentiment, and thorough analysis of economic conditions—gradually provide enough evidence to support a market forecast.

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Right now, those indicators suggest it’s time to act. While the U.S. stock market may not have reached its ultimate low in this recent downturn, the worst appears to be over. Fear, uncertainty, and doubt should no longer be driving investment decisions. Instead, this could be a prime opportunity to buy stocks. Here are four key reasons why, along with three companies that have attracted significant insider purchases.

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1. The U.S. Economy Is Not on the Brink of Recession

A major reason for the recent stock sell-off is concern about an impending recession. However, those fears may be misplaced. As economic conditions become clearer, stocks are likely to rebound. Several indicators, including insights from economists, consumer activity, and corporate insider transactions, suggest the economy remains resilient.

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Goldman Sachs economist Jan Hatzius recently argued that fears of an economic downturn are exaggerated. Key employment data remains strong, which is significant since consumer spending accounts for roughly two-thirds of the U.S. economy.

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That said, tariffs could present challenges. Hatzius outlined three ways tariffs can hinder economic growth: they function as a tax on consumers, eroding disposable income; they create uncertainty that discourages business investment; and they make banks more cautious about lending. Due to the effects of tariffs, Hatzius recently reduced his 2025 U.S. GDP growth forecast from 2.4% to 1.7%.

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President Donald Trump has been adamant about enforcing tariffs, but if voter sentiment turns against his economic policies, he may reconsider—especially with elections on the horizon. Polls indicate a shift in public opinion, which could influence policy decisions.

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Bank of America economists also believe the job market remains strong enough to prevent a recession. They note that income growth continues to outpace inflation, helping maintain consumer spending power.

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Market analyst Jim Paulsen anticipated this economic slowdown but does not foresee a recession. Meanwhile, Ed Yardeni of Yardeni Research acknowledges some weakness in employment and consumer spending, partly due to recent harsh winter weather. While he raised his recession probability estimate from 20% to 35%, he remains optimistic about the economy’s resilience.

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2. Consumers Are Still Spending

Consumer sentiment, as measured by the University of Michigan’s Survey of Consumers, dropped significantly in mid-March. However, actual consumer spending habits have not yet changed in any substantial way.

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At a Bank of America retail-sector conference in Miami, analysts noted that while people may be feeling uncertain, they are still shopping. Walmart executives, for instance, reported that they have not seen significant shifts in spending behavior. Additionally, spending on leisure activities remains stable, suggesting that consumers are not retreating into financial caution despite the decline in sentiment.

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3. Insiders Are Buying Again

Corporate insiders had been on the sidelines for several months, but over the past two weeks, they have resumed buying, often in large amounts. Notably, there has been an increase in purchases exceeding $1 million, which is unusual.

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The areas attracting the most insider buying include cyclical sectors such as energy, technology, banking, and industrials. This suggests that those with insider knowledge do not anticipate a recession.

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A key metric tracked by Vickers Insider Weekly, which measures the ratio of insider selling to buying, recently dropped to 1.71. A reading below 2.0 historically signals a buying opportunity. Energy, materials, and consumer discretionary sectors saw particularly strong insider activity.

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4. Negative Sentiment Is a Bullish Indicator

Investor sentiment often serves as a contrarian signal—when pessimism reaches extreme levels, it may indicate that the market is poised for a rebound.

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The Investors Intelligence Bull-Bear ratio recently fell to 0.8. Historically, this metric has been a strong buy signal whenever it drops below 1.0. Additionally, the American Association of Individual Investors survey has shown that bearish sentiment has exceeded bullish sentiment by more than 10 percentage points for four consecutive weeks, another historically bullish sign.

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Three Stocks with Strong Insider Buying

Wynn Resorts (WYNN)

Wynn Resorts owns luxury casino properties in Las Vegas, Boston, and Macau, with expansion plans that include the Wynn Al Marjan Island resort in the United Arab Emirates, scheduled to open in early 2027.

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Despite these growth prospects, Wynn’s stock is trading at a substantial discount, largely due to concerns about economic conditions and consumer confidence. The stock is currently priced at about half of its average five-year valuation based on key metrics like price-to-sales and price-to-earnings ratios.

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Recently, two Wynn board members purchased $2.2 million worth of stock at around $92 per share, a sign of confidence in the company’s future.

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Victoria’s Secret (VSCO)

Victoria’s Secret reported 7% sales growth in December, but weak guidance led to a sharp stock decline. The company expects flat sales for the year, contributing to its stock price plunging from nearly $50 in December to the $19 range.

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Currently, Victoria’s Secret stock trades at a 48% discount to its historical price-to-sales ratio, making it an attractive value opportunity. The company is also making efforts to reposition itself, expanding into lifestyle categories such as beauty and sports.

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BBRC International, a significant investor, recently bought $17.3 million worth of Victoria’s Secret stock at $17 per share. Notably, BBRC previously sold $16.4 million worth of the stock at $46 in early 2023. This kind of insider reversal is often a bullish sign.

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MSCI (MSCI)

MSCI provides data and analytical software for exchange-traded fund (ETF) and portfolio managers, who use its tools for performance tracking, risk analysis, and strategy implementation. The company also licenses its indexes to investment firms.

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As a market-sensitive company, MSCI’s stock tends to decline when markets weaken or when recession concerns arise, as both factors reduce portfolio values and investment activity.

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However, MSCI’s CEO, Henry Fernandez, recently made a substantial insider purchase, acquiring $3 million worth of stock at prices between $570 and $576 per share. This suggests he believes the sell-off is overdone, especially given that the stock was trading around $640 in December.

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Final Thoughts

While markets remain volatile, several factors suggest the worst may be over. The economy appears more resilient than feared, consumer spending has not significantly weakened, insiders are making large purchases, and sentiment indicators signal a potential turnaround. These conditions could present a strong buying opportunity for long-term investors.

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