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!
Song: Making It Back, Losing It All
Album: Wall Street: Working On the Edge
Artist: Lance Jepsen
Available on iTunes Now at http://itunes.apple.com/us/album/wall-street-working-on-edge/id529290850