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Is This a 'Warning' Coming From Institutional Investors?

It has always been a pretty straight forward relationship ... when Institutional Selling went to a down trend, the pressure came off the market and that allowed it to rise. When the Institutional Selling went into an up trend, their steady increase in selling caused the market to pull back. So, the relationship is inverse ... more selling causes a down market, less selling allows the market to rise.

Currently, the Institutional Selling is in a down trend, so that allows the market to move up ... BUT, take a careful look at today's Institutional Selling chart.

If you look at the NYA Index's peak on September 18th, the amount of selling was considerably less than yesterday's amount of selling with the NYA Index showing a higher/high. That is typically called a negative divergence for the market. Normally, I don't get too concerned about negative divergences because they never kick in until after our Inflowing Liquidity drops. But, this is no ordinary negative divergence because Institutional Investors own a huge percentage of the equities in the market. That presents a higher than normal downside danger for when Institutional Investors change over to a new Selling Trend. (FYI ... this chart is updated and posted every day on our Advanced subscriber site.)

NYSE versus Institutional Selling Chart

 

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