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Re: [RT] GEN: Tracking institutional activity



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Gitanshu,
 
Great post and thorough response regarding block trading. 
Personally, I'm interested more for the market sentiment of the institutional 
vs. retail trades and not for trading individual stocks. It's important for me 
as an ant to know where the elephants are stepping. :-) I will take a look at 
the web sources you have mentioned, thanks.
 
Best, John
<BLOCKQUOTE 
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  ----- Original Message ----- 
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From: 
  <A href="mailto:onwingsofeagles@xxxxxxxxxxxxx"; 
  title=onwingsofeagles@xxxxxxxxxxxxx>Gitanshu Buch 
  To: <A 
  href="mailto:realtraders@xxxxxxxxxxx"; 
  title=realtraders@xxxxxxxxxxx>realtraders@xxxxxxxxxxx 
  Sent: Friday, October 13, 2000 9:09 
  AM
  Subject: [RT] GEN: Tracking institutional 
  activity
  
  Here are a few websites/sources, some free, some paid - that 
  track institutional activity of buying/selling.
   
  It is presumed that a block trade is sponsored by 
  institutions for their own account or acting on behalf of clients. The retail 
  trader (including the day trader) is presumed not to swing a bat the size of 
  >$200,000 or >10,000 shares per pop.
   
  It is also presumed that the reader knows that the better 
  institutions build positions by buying into weakness and liquidate positions 
  by selling into strength. CANSLIM types of setups are layups for booking gains 
  in the institutional world.
   
  Also - snapshots of a single day's activity (like yesterday) 
  are meaningless as far as drawing conclusions is concerned - one needs to 
  watch the cumulative impact of institutional buying/selling. 
   
  After all, each trade has 2 sides - so who are we to judge 
  that one institution's dump isn't another institution's inventory 
  build?
   
  It is the price at which that trade takes place that defines 
  accumulation/distribution.
   
  On upticks, someone is urgently buying. On downticks, 
  someone is hitting the bids in the "get me outa here" mode.
   
  Most block trade data & tape reading works well on NYSE 
  stocks because they report each trade sequentially - Nasdaq, on MOST names, 
  doesn't do that with any consistency.
   
  Given all the above caveats - and then some:
   
  a/ I-Watch at Thomson Investors Network:
   
  If the link below breaks on your email reader, go to <A 
  href="http://www.thomsoninvest.net/index.sht";>http://www.thomsoninvest.net/index.sht
   
  and find "I-Watch" on the left menu bar.
   
  <A 
  href="http://iw.thomsoninvest.net/iwatch/cgi-bin/iw_page?group=0&1=Go&temp=home";>http://iw.thomsoninvest.net/iwatch/cgi-bin/iw_page?group=0&1=Go&temp=home
   
  Data is delayed for the free section.
   
  b/ Q-Charts has a reporting feature that presumably captures 
  all block trades. It costs $80 per month and can be found at <A 
  href="http://www.quote.com";>http://www.quote.com
   
  One can use Q-Charts' time & sales to export data into a 
  spreadsheet and see sequential buy/sell interest on block and non-block 
  trades. This is what I do, and I guess this is the modern day version of tape 
  reading 101.
   
  c/ Bloomberg terminals have a function called Money Flow, 
  which will also get you what the homegrown Q-Charts or any other time & 
  sales spreadsheet will - except with the ease of a few punched 
  keystrokes. Their website & TV program show snippets of this 
  function. You can read about it here and see the webcast, free 
  daily:
   
  <A 
  href="http://www.bloomberg.com/tv/moneyflow/";>http://www.bloomberg.com/tv/moneyflow/
   
  I caution you re the term Money Flow: This is how it is 
  done, not the money flow indicators that come in canned packages or seen on 
  other websites - most of which are derivations of OBV, which is a flawed 
  concept as far as tape reading is concerned. It indicates something (hence it 
  may be a valid indicator) but it ain't tape reading based accumulation/distro 
  which needs tick level data and not assumptions like "price closed up so all 
  the day's volume = accumulation".
   
  CNBC one day launched their "money flow" section in the 
  evening hours with much fanfare around the time they extended the Insana 
  program by 30 minutes and debuted their trading wall. The indicator was given 
  by Reuters. One quick check basically told me that it was OBV with a 21 day 
  moving average. I emailed them that they were up the wrong path and they 
  killed it (the segment). I wish they'd taken it up and delivered the research 
  instead - it would've been nice.
   
  Also - the Bloomberg Money Flow web page shows institutional 
  activity only, and for the past 6 months only. There are non-institutional and 
  longer term influences as well on acc/distro, and these are sometimes at odds 
  with institutional accumulation. 
   
  Eg - yesterday's rally in Intel was purely retail buying. 
  Institutions weren't playing any significant role. Today's rally on Citibank 
  is purely institutional - retail isn't playing much of a part early on. Both 
  mean nothing on a day-by-day basis.
   
  Over time, though, such stuff adds up. You can see today's 
  feature on Bloomberg, GLW - and you will see that there is a floor to the 
  price (from technical analysis), there is institutional accumulation more 
  persistent than a one day/week flash in the pan, and you see in IBD that 80 
  funds bought $4.8 billion worth of stock.
   
  So you start believing that support is real support and not 
  an ephemeral technical price level.
   
  Hence it is recommended that one maintains one's own trade 
  level database to arrive at what counts as accumulation/not.
   
  As you know, money flowing in doesn't mean prices have to go 
  up - and it is price action that puts $$ into the bank account.
   
  d/ IBD reports exchange-level block trade data + top-rated 
  mutual fund accumulation / distribution on a daily basis for a selected group 
  of funds. Each Friday's issue lists top buys & sells of mutual funds 
  that are performing in the top 5% of the mut fund universe on a trailing 3 
  year basis - with specific amounts invested at company level.
   
  e/ Laszlo Birinyi has his own research shop that basically 
  lives off of such research. His work can be found at <A 
  href="http://www.lbirinyi.com";>www.lbirinyi.com - most of it is 
  expensive research, but he writes regular columns for Forbes and appears 
  frequently on Wall Street Week and CNBC. A link to his prior Forbes articles 
  is here - <A 
  href="http://www.forbes.com/columnists/";>http://www.forbes.com/columnists/
   
  You can dig into the archives and see his public 
  recommendations - and compile the track record from 1997 to date for 
  yourself.
   
  All these are "big picture" spice. They don't matter much to 
  people using charts to trade. They don't tell you anything except "this is 
  what is happening" - so beyond wanting to know why, they don't serve any 
  purpose for the tactical trader.
   
  They are also not the "holy grail" mother of all indicators 
  etc. Institutions, like individuals, can be and often are wrong. The term they 
  prefer to use is "early", but wrong is wrong. For every stock picked by Laszlo 
  Birinyi or the Bloomberg page or the IBD universe or any other source, there 
  were 5 others that did better/worse. So - one could take the copout and say 
  "so what, in a bull market, anybody's a genius".
   
  They are - until they met a Nokia. Or a P&G. Or, for 
  that matter, a Home Depot.
   
  For the patient investor (no pun intended, though most 
  "investors" might feel like patients of the emergency ward these days) - this 
  is a priceless tool. It goes back to the days of Jesse Livermore and Humphrey 
  O'Neil and is still valid these days in the land of Laszlo 
  Birinyi.
   
  Hope this helps. Some friends are insisting that I write up 
  some stuff on this for TASC so you may soon read about all this in print - but 
  recent events have not permitted the luxury of the time needed to do justice 
  to their editorial dept. Maybe some day soon...
   
  GitanshuTo 
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