We track institutional trader activity because it is institutional traders that cause the formation of all money making trends in the stock market.
It doesn’t matter if you are a day trader, swing trader, or long term investor: we all need a trend to form after we buy a stock in order to make money.
I invented a unique method for tracking institutional trader activity as you will see in the animation below.
The TICK measures the ability of market makers to match up a buy order (+1 on the TICK) with a sell order (-1 on the TICK). The theory is that when institutional traders step in and buy across entire sectors, it is more difficult for market makers to match up every buy order with a sell order. As a result, a temporary anomaly forms in the TICK.
I then look at which sectors went up or down the most during the anomaly that forms on the TICK.
I also look at the news stories released during the anomaly and make an educated guess on what news caused the institutional buying or selling.
Last week, institutional trader activity was detected on Thursday, May 24th 2012 during the last hour of trading. The sector that experienced the most buying during this time frame was the Utility sector which is a traditionally defensive sector. The news that had the greatest probability of causing this institutional activity was when the Italian Prime Minister Mario Monti said he expected Greece to remain in the Euro-zone and that he thought Italy could persuade Germany to issue Euro bonds to help struggling countries.
Song: Fortune On Wall Street
Album: Wall Street: Working On The Edge
Artist: Lance Jepsen
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