Rule #1: To Always Be Right in the Market, do what Institutional Investors Are Doing …

 (The Corollary to Rule #1 is to Never go Against Institutional Investors.)
Professional traders know the importance for NEVER doing the opposite of what Institutional Investors are doing.

That’s because the market moves in the same direction that Institutional Investors are moving in.  Here is what you need to know:

  •  When Institutional Investors are in Accumulation, the market goes UP.
  •  When Institutional Investors are in Distribution, the market goes DOWN.

Take a few minutes to look at the chart below and you will see how accurate it is for showing what the true market trends were.  (FYI … This is just one of many charts that we post everyday for our paid subscribers … It can be found in Section 1, Chart #3).

Food for thought: Most investors would probably do a lot better by just trading in the same direction as this one chart that shows Institutional Accumulation and Distribution … because Institutional Investors do control the market.  (Please Note this Definition:  When you look at the first chart below, it says Institutional Buying and Selling.   Don’t get confused … when the blue Institutional Buying line crosses above the red Institutional Selling line, then Institutional Investors are in Accumulation.  When the blue Institutional Buying line crosses below the red Institutional Selling line, then Institutional Investors are in Distribution.

What else should one know?

This chart shows  specific activity that occurs like the unwinding or declining of Accumulation or Distribution.   In this scenario, the “gap size” between the Buying and Selling lines starts to decrease … in other words, the two lines start to converge on each other (rather than expand).  As the lines are starting  to converge on each other, the market is either moving sideways, or about to reverse direction.

 An Interesting True Story …

There is much controversy over the May 6th. 2010 crash with pundits blaming it on a Citi trader, or on a system failure, or even on foreign sabotage.  Everyone was surprised … right or wrong?

Wrong, our subscribers were not surprised.  (Take a look at the chart below and see why.)

When you look at the chart (below), you will see that Institutional Investors had been in Accumulation since February 16th.   They stayed that way until April 27th. when they had their first day of going into Distribution. And then on May 4th. (two days before the precipitous market drop), they were in full Distribution.)   [We also had our Super Accelerator model give a sell signal on May 4th.]

So, two days before the big surprise drop that nobody could supposedly explain, Institutional Investors were in full Distribution.   What do you make of that?

Note:   Our message today is clear and simple …
Do NOT invest in the opposite direction of what Institutional Investors are doing.