Buy Side Institutions Using Dark Pools
Most Technical and Retail Traders have heard about Buy Side Institutional Accumulation and Distribution, but few understand another institutional action which is ROTATION.
Accumulation is the acquiring of hundreds of thousands, to millions of shares of stock over an extended period of time. Dark Pool Quiet Accumulation is the most common nowadays which is when Buy Side Institutions use Dark Pools aka Alternative Trading Venues, which do not show their activity on the exchanges.
Buy Side Institutions are able to hide their 100,000 – 500,000 share lot activity from High Frequency Traders, Independent Investors, Retail Traders, and Small Mutual Funds and Small Pension Funds Managers by using the Dark Pool venues. This enables them to buy large to giant quantities of stock over time without disturbing price. The primary different between exchange activity and Dark Pool activity, is the ability of the Buy Side Institutions to not alter the trend that is underway at that time.
Accumulation INCREASES the amount of money in the stock market fueling Bull Markets and Uptrends, even though the Institutions buy in such a way so that price does not move much when they are buying.
Distribution is the selling of a large quantity of stock over time, OR because of redemption demands.
High redemption demands tend to occur near the end of an Intermediate Term Correction or the end of a Bear Market.
Therefore Dark Pool Quiet Distribution is often faster than Dark Pool Quiet Accumulation. Dark Pool Quiet Distribution is when Buy Side Institutions sell huge quantities of stock without moving price much.
Distribution removes money from the stock market, which fuels more downside selling.
Rotation patterns occur during the mid to final years of a Great Bull Market which is a Bull Market that lasts for more than 4 years. Dark Pool Quiet Rotation™ is the systematic, and carefully calculated selling of shares of one stock and the buying of another stock. Dark Pool Quiet Rotation patterns tend to slowly bend trends either in a Bowl Bottoming Formation OR in a Rounding Top Formation. Platforms are also a common pattern for Dark Pool Quiet Rotation in or out of a stock.
The chart below with a monthly view shows the commencement of a Rounding Top Formation that developed due to steady Dark Pool Quiet Rotation.
Martha Stokes CMT
TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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