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Why the Institutions Can’t Hide Their Tricks Anymore

On Wall Street, there are the big guys, and there are the little guys.

The big guys are the institutions.

These are pension funds, mutual funds, hedge funds and other large players.

We’re the little guys… Individual investors.

Sure, individual investors like us can have an impact on the big guys…

Like what happened with the “meme” stocks that got pushed around by traders on Reddit last year.

But most of the time, it’s best not to get in the way of the institutions when they’re making a big move.

And right now, the institutions are selling in size.

I’ve told you recently that most long trades just aren’t working.

One of the reasons for that is a simple lack of buying pressure from Wall Street.

Instead, we’re getting selling pressure, which as you’ve seen recently has overwhelmed the bulls and has them scrambling for the exits.

How the Big Guys Operate

The big players on Wall Street have all sorts of tricks for camouflaging their orders and rotating out of certain sectors.

Most individual investors have no idea about these rotations while they’re getting underway.

But when the institutions start dumping everything, the volume is simply too much to hide.

Take a look at the weekly chart of the Invesco QQQ Trust (QQQ), an exchange-traded fund (ETF) tracking the Nasdaq Composite Index.

Daily Chart of Invesco QQQ Trust (QQQ) with Volume — Source: TC2000

So far, we’ve seen four weeks of selling on above-average volume, and we are well on our way to a fifth week.

The positive weeks came on low volume. And the one high-volume up week was barely positive, closing only pennies above the prior week’s close.

This is what it looks like when the institutions, also known as the “smart money,” are getting out of the market.

Attempting to time buy the bottom is foolish and can lead to heavy losses.

Here’s My Advice

As regular readers know, I’ve been emphasizing trading smaller positions and setting tighter stops lately.

We’ve even gone short with the stocks on this week’s Watchlist.

So, at this point, my advice shouldn’t come as a surprise… 

Get out of the way of this storm. Preserve your capital, and wait for conditions to improve.

Be skeptical of a strong day or two in the midst of this selloff, and resist the urge to jump back in at the first sign of a green day. 

After all, many of the largest single-session gains came in the middle of bear market corrections like the ones we saw in March 2020 and during the 2008 financial crisis.

And lastly, don’t worry… 

When the time comes to go long again, I’ll be the first to let you know.

Embrace the surge,

Ross Givens

Editor, Stock Surge Daily

Ross Givens
Ross Givens

I bought my first stock when I was 12 years old. It was Microsoft. I’ve been a registered financial advisor. I’ve worked as a stock broker. I ran a managed fund. I was a Vice President at JP Morgan with Series 7, Series 66 and Series 3 securities licenses. I’ve been featured on Fox Business, CNBC, Bloomberg, and a bunch of other networks. The only thing I enjoy more than making money, is helping YOU make money.

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