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INDICATORS.

WHICH TECHNICAL INDICATORS SHOW BIG INSTITUTIONAL INVESTORS MOVEMENTS (BUYING OR SELLING ETC.)? THANK YOU. MIKE

Best Answer

  • markdmarkd mod
    edited January 2015 Accepted Answer
    This doesn't answer your question directly, but if you are interested in following institutions, you should find it interesting:

    http://stockcharts.com/articles/journal/2014/10/a-virtual-phd-in-institutional-style-investing-tensile-trading-chartpack-update-50.html

    As for specific indicators, cumulative volume indicators can provide clues when they diverge from the price action - like on balance volume, accumulation/distribution, force index. So if price is moving down or flattening out after a down trend while these indicators are tending to the upside or not falling, it may be because of institutional activity. Likewise on the up side, if price is rising or flattening and these indicators are generally sloping down, it could be institutional distribution.

    However, these indicators are not definitive in marking a change of trend. Prices can continue down or up for some time after a divergence. Also, institutions do not always agree, so while one is distributing another may be accumulating, or vice versa, so the trend just gets muddy for a while instead of reversing.

    Another clue is just price bars themselves. Long solid candle bars with above average volume occurring at intervals, all in the same direction tend to indicate more prices in that direction to come, especially if you don't see prices breaking those bars in the opposite direction. When those bars hold - e.g. a long up bar's low fails to break after several days of selling when price comes back in it's range, - it's institutions defending their position. This was the pattern Nicholas Darvas used (read his book How I Made $2,000,000 in the Stock Market).

Answers

  • ok,thank you very much.if you have any other ideas pls let me know.
  • KevoKevo
    edited February 2015
    $XII is the Institutional Index. You might notice that it is highly correlated to most other major indexes which suggests there is nothing extra special about this index in terms of institutional buying/selling.

    Notes on $XII: 75 stocks most widely held as equity investments among institutional equity portfolios. Designed to reflect the performance of core stock holdings of institutions.

    I don't know to what extend institutions utilize this, but Institutions do a lot of trading in Dark Pools. It used to be called Upstairs Trading.

    Dark Pool = alternative trading venue.
    Dark Pool = is a key part of today's market.
    Dark Pool = is a way for institutions to trade among themselves.
    Dark Pool = offer the potential to improve returns for mutual funds.
    Dark Pool = improves fund performance through reduced costs and better prices on stocks.

    Alternative Trading Venue = more than 40% of daily US stock orders never pass through an exchange.

    Upstairs Trading = refers to institutional investors trading away from the floor of the stock exchange.

    Trading outside exchanges has a long history and clear advantages.
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