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    Institutional Buying Indicator PDF

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    Balajii Rangaraju

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    Institutional Buying Indicator PDF

    Uploaded by

    Balajii Rangaraju
    157 views4 pages

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    Institutional_Buying_Indicator.pdf

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    © All Rights Reserved
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    157 views4 pages

    Institutional Buying Indicator PDF

    Uploaded by

    Balajii Rangaraju

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4
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    The key takeaways are that the $TICK chart can be used to gauge institutional buying and selling by showing the number of stocks with upticks vs downticks, and extreme readings may indicate institutional programs are in effect.

    The $TICK chart shows the number of stocks with upticks versus downticks. Extreme readings above 1000 or below -1000 may indicate institutional buying or selling programs are in effect, as institutions have the resources to trade large baskets of stocks simultaneously.

    Extreme readings near or above 1000 and -1000 on the $TICK chart can show the presence of an institutional buy/sell program or heavy short covering. Very high positive readings may indicate institutions are heavily buying.

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    Institutional Buying Indicator


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    Trading volume normally will spike if huge institutions place a big move.
    Along with the stock price's change, you may make some guesses. For
    instance, if trading volume spikes relative to the stock's average volume
    during a period when the stock price also increases, that can mean big
    investors are buying. On the other hand, if you see a stock's volume increase
    and the stock price falls, you could guess institutions are selling.

    The drawback of this method is that volume might be a result of external


    elements, like options expirations, short selling and other trading noise.

    There exists a better way than simply investigating volume to ascertain if you
    have institutional buying and it is known as the $TICK chart. This chart tells
    you how many stocks are in upticks versus downticks.

    In standard retail buying/selling, the amount of ticks typically falls between


    500 and -500 (around 95% of the time) as the quantity of ticks down and up
    on all stocks for any given moment is fairly random therefore extreme
    readings are low. On the other hand when institutions buy and sell, while
    using impressive computer trading platforms they normally use and computer
    calculations which enable them to buy and sell a basket of stocks at the very
    same time (think program trading, high frequency trading, index arbitrage)
    then it creates a distortion in the ticks and that means you will get these
    excessive numbers where a large number of stocks (800 - 1000) all had
    simultaneous upticks or downticks at the same time (for instance buying the
    S&P500 would cause 500 stocks to be bought at the same time and so you
    would get a > 500 reading). Typical retail traders simply don't have the
    hardware resources to execute such trades nor the money to buy and sell on
    this scale and magnitude, so you should consider that it could only be the
    institutions. Consequently once you add these tick readings together, you can
    acquire a great perception on the amount of institution participation.
    Extremes in the $TICK can be seen on readings near or above the 1000 and
    -1000 level, extreme TICK readings may show the presence of an
    institutional buy/sell program or heavy short covering on large positive
    readings.
    © http:www.GuerillaStockTrading.com

    Also important to notice is that on Friday, September 3rd 2010, the weekly
    $TICK chart closed at an astonishing 1168 giving us proof that institutional
    traders were in this market buying following the series of better than
    expected reports last week on housing, unemployment, and manufacturing. It
    also implies that institutions have some huge cash that they are starting to
    take positions with before the start of the 4th quarter. If our sworn foes, the
    institutional traders, are in this market buying and destroying short sellers, we
    need to be going after exactly the same thing. For the moment, we stay on the
    sidelines until an uptrend develops in SPY which will most likely be soon.

    I did a video on the $TICK indicator because most often a visual presentation
    will help you learn better. To watch the video that accompanies this report, go
    to http://www.guerillastocktrading.com/lessons/institutional-buying-indicator

    http://www.guerillastocktrading.com/lessons/institutional-buying-indicator

    I hope you enjoy this report and if you think this report was good, you've got
    © http:www.GuerillaStockTrading.com

    to see my blog. You can look over my shoulder as I trade throughout the
    trading day via Facebook or Twitter, watch GuerillaStockTrading TV, get live
    news stories that impact your trading account in real time, and more.

    Thank you and happy improved trading.

    Lance Jepsen, GuerillaStockTrading.com

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