Is Micron Technology (NYSE: MU) headed higher, or lower? That's the question we ask when we evaluate insider buying and selling. We ask because how executives spend their paychecks is often a reflection of what they think of their companies' prospects.

Of course, not all buys are equal. According to two decades worth of research from Dr. H. Nejat Seyhun compiled in his book Investment Intelligence from Insider Trading, buying is most predictive when it (a) comes from the CEO or other top-level executive, and (b) it's performed in bulk. Seyhun found buys of between 10,000 and 100,000 shares to be most informative.

How do Micron Technology's managers measure up against Seyhun's benchmarks over the past year? See for yourself:

Insider Rating Bearish: Multiple, high volume sales from a variety of executives, including CEO Steve Appleton.
Business Description One of the leading makers of flash memory technology for smart devices.
Recent Price $8.21
CAPS Stars (out of 5) ****
Percentage of Shares Owned by Insiders 0.67%
Net Buying (Selling)* ($7.29 million)
Last Buyer (% Increase) None over the past 12 months
Last Seller (% Decrease) Patrick Otte, VP of Human Resources
105,583 shares at $7.25 apiece on Nov. 17, 2010
(Reduced direct holdings by 25%.)
Competitors OmniVision Technologies (Nasdaq: OVTI)
Rambus (Nasdaq: RMBS)
SanDisk (Nasdaq: SNDK)

Sources: Form 4 Oracle, Capital IQ, and Motley Fool CAPS. (Data current as of Dec. 19.)
* Open market sales and purchases only.

What we're tracking here, and why
Insider buying data can be confusing. Here, I'm concentrating only on buying and selling conducted in the open market. With most of these transactions, insiders control the timing. Other times they're buying or selling under the purview of a 10b5-1 plan. Either way, personal holdings are being bought and sold.

Those personal holdings matter the most -- they're the shares executives hold for investment, rather than compensation. Employee stock options are different; they're compensatory in the purest sense. I've stripped out options-related buying and selling from the calculations you see above.

The Foolish view: bearish
Micron has gained momentum recently, up nearly 10% over the past month. Toshiba may have something to do with that. On Dec. 9, the Japanese electronics giant suffered a brief power outage that could result in a 20% reduction in its ability to ship flash technology customers. Investors appear to believe Micron will fill the gap.

We'll have a better idea if they're right tomorrow, when Micron reports earnings after the bell. Analysts are expecting $0.30 in per-share earnings on $2.38 billion in revenue. Both figures would make for big growth for the flash chipmaker.

"Unloved sector. If you look at [trailing 12 month] results they are awesome, cash is spewing, balance sheet is good, [and] debt is being reduced. The risk here is the brutal cyclical nature of semis. It's a shorter-term bet," wrote All-Star investor nonzerosum earlier this month.

If only insiders appeared to be as confident. Sadly, that doesn't seem to be the case. Multiple insiders were selling in volume last month at prices near to where the stock trades today. CEO Steve Appleton was the biggest seller, parting with 210,000 shares between Nov. 1 and 5.

Two things keep me from recommending that other Micron shareholders sell. First, big sales aren't the same as cashing out entirely and Appleton still holds more than 2 million shares. Second, Micron trades for a fraction of its estimated long-term growth. I can't see selling when the stock could be a huge bargain at current prices.

Do you agree? Disagree? Log into Motley Fool CAPS today and tell us how you would rate Micron Technology. You can also add the stock to your watchlist.

And if you want me to take a Foolish peek at the insider action of your favorite stock, email me here, reply to me on Twitter, or use the comments box below. I'll write this column as often as you, our readers, demand.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy has its eye on you.