I received some questions asking me to elaborate on the institutional trader report I just released here.
In this lesson, I go into depth about why the volume surges right before market close are nothing less than attacks against amateur traders and their ability to react to the market.
Think of it like this. By institutional traders and market makers cramming 3 hours of volume action into the last 60 seconds or so of trading, it greatly reduces our reaction time before the market closes.
Would you rather try and dodge a ball thrown at you, or a bullet shot out of a gun? Unless you’re Superman, you would rather try and get out of the
way of a slower moving ball than a super fast sub-sonic speeding bullet. The reason is that you have more time to react. Trading is the same way. The more time we have to study a chart and react, the better decisions we make. Institutional traders have compressed the time we have to act down from hours, to just a few minutes.
In the video below, I sketch to better illustrate what is taking place before market close and why you need to be aware of this for your trading next week.
Institutional traders work against amateur traders. This truth has never been made more clear than in institutional trader behavior demonstrated in markets last week.
In order to blind amateur traders, institutional traders processed huge block order buys in the last 1 to 5 minutes of trading. Think about it. If you saw those buys coming in earlier in the day, you could have set support and resistance lines and reacted to that buying hours earlier. By forcing the trades in the last minute of trading, then having the market close, amateurs didn’t stand a chance at responding to the market. Worse, these huge orders ultimately were recorded in a gap up open the next day, destroying anyone short this market.
The other truth that was revealed last week is the tight relationship and collusion between institutional traders and market makers. There’s no way that market makers were able to keep up with processing orders of this size in the last 60 seconds of trading. In some cases, the last minute of
trading volume exceeded more than half of the entire day’s trading volume! The only way market makers could have kept up with processing these trades is if they already knew the trades were coming.
Institutional buy activity was detected on the TICK on Wednesday, June 6 2012, and Friday, June 8 2012. On June 6th 2012, institutional traders bought Financials, Energy, and Technology. On June 8th 2012, institutional traders bought Consumer Discretionary, and again, Technology.
Be very careful trading next week because of the last 5 to 10 minutes of trading. Your stop can get hit in the last minutes of trading quickly. You can also benefit if you’re on the right side of the last 10 minute volume surge. We don’t know how long this behavior by institutional traders will last so be prepared next week!
Remember when I told you guys you don’t have to buy any of these picks in order for this stock screener to be really valuable? This is why I came out with a controversial video called Shocking News: The Trend Is Not Your Friend.
Unfortunately I’ve had to ban and block a lot of comments on the Stock Trading Master YouTube channel. I’ve received and blocked comments ranging from you suck, to people who think they are going to teach me about how to use multiple time frames to trade… LOL
Folks, the market kicking your butt has nothing to do with my trading skills or that I don’t know how to look at multiple time frames. It has everything to do with trend trading no longer works in this type of market and this weekend’s stock screener proves that.
Notice that for the last 2 weekend stock screens, short ETFs were king according to the Alligator Method. Now, what is the Alligator Method? It’s looking at multiple time frames then overlaying them on a single chart! What do you think a moving average is? If you overlay a 50 and 200 day
moving average on top of your daily chart, then you are looking at 3 time frames at once. So the dummy that commented about how I need to change the time frames I’m looking at, here’s my question for you. How’s that working out for you? LOL… Be honest. You’re getting killed looking at multiple time frames and no matter what time frame you switch to, you still are losing money in this market.
Think about the weekend stock screener over the last 2 weeks folks. It’s based entirely on trend trading. It uses multiple time frames as evidenced by 3 moving averages forming a pattern that looks like an alligator opening its mouth. This is an awesome tool to use WHEN THE MARKET IS TRENDING. But clearly it’s not. Notice how this week all the short ETFs no longer appear! In other words, if you were trend trading and looking at multiple time frames, you got head faked to the downside in these short ETFs!
This is why I say that in this market, the trend is not your friend; however, the microtrend is your friend. We’ve got to compress our trading ranges and go for a quick 5% to 10% profit over a 1 to 4 day holding period, then get out quickly. This by definition is not a trend but rather a microtrend. It’s a very small 1 to 4 day bounce you are trying to time, then you are getting out. Look to enter a new long on Monday or Tuesday, then close out the trade by Thursday or Friday. Go all to cash over the weekend. Then analyze the market open on Monday and start hunting for your next 1 to 4 day hold.
Everything ties together in the stock market and this weekend stock screener is no different. Even if you don’t see value in any of these actual stock picks, you get value when you look at the stock screener from a holistic point of view as a whole. Profitable secrets are revealed both when something works, AND when it doesn’t work.
For you weekend stock researchers, this stock screener will be ran and new potentially hot stocks posted every weekend at http://www.guerillastocktrading.com