What Is the Market Participant Groups Cycle?

Candlestick Patterns Show Which Group Is in Control of Price

The Market Participant Groups Cycle occurs in visual candlestick patterns on the charts, and analysis should be confirmed with appropriate indicators. The following is a breakdown of how Market Participant Groups move price in specific ways, with the groups name in the cycle. The Index chart example below shows their footprints.

Prior to this short-term bottom, the Index had been in a weak Trading Range wide sideways pattern after a “fake rally,” brought about by the Retail Traders Market Participant Group and the Smaller Funds Market Participant Group. The rally failed to break through the resistance highs, which was a critical factor in analysis of this Index at that time. Coupled with lower Volume, inconsistent runs, and a lack of Dark Pool Quiet Accumulation continuation patterns the fake rally collapse was obvious even before the steady lower highs.

The collapse of the fake rally caused many Smaller Funds to panic and start selling, as their portfolios could not manage the selling spree initiated by the High Frequency Trading HFT Firms Market Participant Group. This fueled the selling, with of course retail news spurring smaller investors to fear and panic as well.

Stocks plummeted to the prior low Dark Pool Buy Zone™ around 15,500. The Dark Pools of the Buy Side Institutions Market Participant Group had Time Weighted Average Price orders that were waiting to trigger large lots of 100,000-400,000 and giant lots which are over 500,000 to buy specific index components at bargain prices for Fundamentalists.

There are many large to giant lot orders still moving through the automated market system, but you just cannot see them anymore as they are ALL off-exchanges.

The Buy Zone for the Dark Pools was fairly wide and halted the selling panic quickly.

A true rally followed with Buy Side Institutions using Dark Pools raising their Buy Zones range. This was instigated as Fundamentals slowly caught up to stock prices. The Index moved up to the prior resistance level and halted, as the Buy Side Institutions ceased buying well below that level which is their normal pattern.

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Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a StockCharts chart, courtesy of StockCharts.com

Chartered Market Technician
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