A Critically Important Indicator?
For years, we have pointed out that Institutional Investors pretty much ruled the markets because they were responsible for 50% to 70%+ of the volume in any given day.
For that reason, watching how much they buy and how much they sell everyday is critical. Buying when Institutions are selling is foolhardy, and so is selling when Institutional investors are buying.
Today's chart is shown as a courtesy to our free members and it can be seen everyday on our paid site by going to Section 4, Chart 6.
Today's chart goes back to last December and shows when Institutions were in Accumulation and when they were in Distribution. (They were in Accumulation when the blue line was above the red, and in Distribution when the red line was (is) above the blue.) Do note what happened to the NYA Index when these shifts occurred.
The vertical lines show when each cross-over shift occurred. What is important to note, are the times when the two lines started to converge. That is the early warning sign that Institutional Investors will shift direction. If you wait until the actual cross-over day, the market has usually figured it out on that day with the market having a spike up or down.
What is this chart saying now?
It is saying that Institutions are in Distribution.
It is also saying that the Institutional Buying and Selling has started to show signs of converging because the Institutional buying broke above a resistance and it made a higher/high. At the same time, the Institutional selling is still in an up trend, and it has not made a higher/high yet. So, Institutions are showing signs of abating on their level of Distribution.
Bottom line: Institutional Distribution levels are decreasing. If they converge more, with Institutional selling dropping below the 9000 level, then the market's bias will start shifting to short term positive.