Is This a 'Lurking Problem'?
Is this going to turn out to be a problem?
Many of you know the importance of following what the Institutional Investors are doing. It's no wonder, because they are responsible for over 50% of the market's volume every day.
One of the specific Institutional activities we follow is what the daily Institutional selling activity looks like. Obviously, there are other activity indicators to be considered with this chart, but none-the-less, it may be important to look at this chart today ... here's why:
Typically, when the Institutional Selling rises and trends up, the selling pressure causes the market to fall. When Institutional Selling falls, the lack of selling allows the market to go up.
Currently, we have an unusual condition. First, the Institutional Selling is trending down which is positive for the market moving up.
However, the unusual occurrence is that the level of selling has risen over the past 8 days ... enough to be negatively divergent with the rise on the New York Stock Exchange's index.
So, at the close yesterday, Institutional Investors had maintained the posture of slowly increasing selling while the market went higher. Will they stop this profit taking now, or will they once again go back to a reduction in selling? Until that question is answered, this should be considered a "red flag."
(This chart can be seen daily on our paid subscriber site in Section 3, Chart A.)