Options Wonderland

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Institutional Selling Activity
Marty Chenard
October 15, 2008

You all know the importance of following Institutional Investor actions because they control well over 50% of all trading volume on any given day. Trade with them and your risks are reduced significantly ... trade against them and your risks are increased dramatically.

Take a minute to observe today's chart and you will clearly see that this is true. This chart monitors daily Institutional Selling activity and the actual trend. When the trend is going up on Institutional Selling, the market drops. Conversely, when the Institutional Selling trend is going down, the market rallies up.

A quick look at this chart will show you how the market's up/down moves have correlated with this Institutional Investor phenomena. Currently, Institutional Selling has dropped in the past 3 days, but not enough to reverse their selling trend. Until it does, the market will not find the legs to sustain an up rally. (Note: Institutional Buying is also an important factor that helps determine when the market goes sideways, and that information is also posted every day. )