For a long time, we have commented that Institutional Investors are the majority investors in the market,and therefore control the market as a group. That would mean that there is a necessity to follow both the amount of Daily Buying and Selling by Institutional Investors. (It is why we post the data everyday on our subscriber sites.)
But, today we will present some of the data and you be the judge whether this is true or not.
Today's chart below show's one aspect of the activity by Institutional Investors ... their daily Selling activity.
Chart explanation:
-
The pink bars are the tick amounts representing the amount of Institutional selling every day.
-
The red line is an exponential average of 3 days.
-
And ... the gray line is an exponential average of 8 days.
So how do you read this chart?
First notice the rectangular areas we posted. If the Institutional Investor selling trend is down, that would mean less and less selling pressure in the market which should allow the market to go up. Look at the two rectangles (on either end of the chart) and notice what happens to the NYA Index when the Institutional Selling trends down.
Now look at the rectangle in the middle of the chart. That one is going sideways which is not an up trend nor a down trend. Given not trend and sideways movement on the amount of Institutional Selling, you would expect the market to move sideways ... which it did.
One more chart reference ...
Note the oblong circles drawn when the pink bar is above the red and blue trend lines. In a bullish trend, when the pink daily bar goes too far above the trend lines, it can be an exhaustion selling move where the selling then retreats. We can see that happen at the beginning of August, and it may or may not have happened yesterday. The spike above the trend lines may not have been large enough to retreat today, and the bias is more selling until a daily selling tick proves otherwise.
So, how would you answer the question: "Do Institutional Investors control or influence the market?"
