Above are 3 1 hour 3C charts showing the SPY, DIA and QQQQ. The red arrows point to a divergence indicating distribution and an eventual turn down. The white arrow is late August accumulation when shorts were very thick in the market. The next red arrow from there shows another negative divergence as that inventory is sold and most probably they are now short. 3C is a proprietary indicator put together using TeleChart's "Custom Indicator" function.
The charts below will show 1 or 3 different things Institutional Holdings, Insider Holdings and Short Interest. Institutional Holdings will be on every chart, they will always be on the top. Pay attention to what 3C is saying above and what StockFinder's Institutional Holdings Indicator is saying. These are important companies and several like AAPL and GOOG have been used recently to move the market due to their weighting on the averages.
AMGN
AAPL
APA
AMZN
BMY
CAT
COST
CSCO
CVX
EMC
GOOG
GRMN
GS
IBM
INTC
KO
MA
MCD
MMM
MO
MRK
MSFT
ORCL
PCLN
PG
QCOM
T
VZ
WMT
XOM
As you can see, these stocks have been under distribution for sometime. This is what causes a negative divergence, rising prices, while institutional money is selling, this can only go on for so long before there's a reversal in stock prices as you can see in the 3C charts at the top. In most cases, the institutional holdings have seen a sharp drop into prices. They'll be updated to fill in the gap you see of a week next Saturday.
Looking at this chart of a WVAP (Volume Weighted Average Price) for Friday I found it surprising that it did not rise dramatically, it barely went up at all and it only takes about 3 bars to turn from a downtrend to an uptrend.
This taken with the 3C charts I posted on Friday, "The C's" is certainly interesting, not to mention what appeared to be defense of a short position on the 3 later afternoon breakouts, the upside rally volume was light, the downside sell volume was heavy, heavier then I'd expect. I have a feeling Mr. Tepper gamed the market on Friday. We have some important reports coming out this week, including GDP which was prefaced by a couple of strange statements from the Fed. However, you must always think of all possible outcomes and how you will react to each BEFORE they occur. If you haven't read it in awhile, please refer to my RISK MANAGEMENT article linked on the site.
If you think the market isn't routinely gamed by Hedge Fund Managers, watch this video again.
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7 comments:
Hi Brandt,
I'm slightly confused.
The 3C charts at the top show accumulation in the latter part of august (as the smart money was positioning for this nasty 'bounce' we have had in september).
But, the other charts you show of individual stocks (even the big stocks like GOOG and AAPL) shows institutional holdings even decreased further in August, no?
What's going on there?
And i take it that because the 3C charts have shown distribution throughout September, there is no way when you 'fill in gap of the data' for September (when the data is released) for the individual stock charts above that institutions could have been accumulating for September?
Well futures just got a nice goosing on open. DOW up to over 10900 in a couple of minutes. SPX to 1153.
That heavy selling that went on during market open to keep the market down was a waste of time when futures can be goosed. It's the same as we saw before open on Friday where we eventually ended up 200 points on the DOW.
I don't think the accumulation was that big and it seems those charts are updated every week so first of all, I doubt the accumulation was even a % and the overall trend from one week period to the next is just two relative points, it's not showing the daily activity, just what it was to weeks ago and what it is two weeks later, the ups and downs in between are not depicted. Furthermore if it were something like 1% they accumulated, the divergence would have been huge it was not that big-it wasn't even leading
I think you are missing the point of the post though, look at AAPL rally and look at the institutions making huge sales. From mid July to the latest data-over 61 million shares have been sold with the steepest drop apparently coming in the last week or two. This is a perfect illustration of a negative divergence, they are selling into higher prices. The amount accumulated could be quite minuscule and was apparently sold off very quickly according to 3C. So the net unchanged short position "might" be explained as the short position being transferred from retail shorts who had to buy to cover, which allows institutions to take the other side of the trade which is to sell short. Selling short is sale transaction, so it's the other side of the trade.
In conclusion, the net short short position being unchanged could very easily be a swap from retail to institutional. That's an pinion of course, but given the fact they seem to be selling, it makes some sense. Fear is the strongest emotion in the market so I doubt very much that the shorts from August are still the same shorts in September.
Hi Brandt,
Thanks for the info.
So, if the accumulation that the institutional 'smart money' made just before the September 'bounce' wasn't that significant, why have we had to 'bounce' 10% in the markets in a month to allow them to distribute those shares (especially when they looked to be distributing almost from day one of the bounce).
And if you feel that the reason the net short position is still very high because it has shifted to the smart money being short rather than retail (who got squeezed out) then this also surely means the distribution is well over and they have are now significantly short, correct? So, it's now in the smart monies interest to see the market go down than up now they are positioned?
I know what you've said about 'the overnight futures market', but given the fact we just went over 10900 on the DOW and up to 1155 on the SPX, are you still confident this is the top and the reversal is underway?
Thanks!
Not withstanding any indicators (3c, low volume) or whatever reason might be subscibed to the very bullish move on Friday, was that not a very strong confirmation of the breakout that every Bear has seemed to think was false???
IMr. Pink, it's not that significant in the grand scheme, but it doesn't take all that much when working with MMs that are raising the ask as well. Especially on such low volume.
I can only speculate, but I'd say the August shorts were squeezed out as the August rally hit a support zone which would have been a target any way. I don't understand the Friday action, I don't think it was coincidence, his remarks and the time they were broadcast. the futures jumped significantly from a modest bounce as I warned the night before to what we saw. However, it seemed strange to me that the 3 intraday breakouts in the afternoon saw so much sellside firepower, certainly with the market being in a bullish state of mind, Friday "could" have been a 400 point day easily. But you watch the 1 min charts and look at the red volume as compared to the rally volume on the breakout moves at 1:30/2:45/3:50.
I'd think if smart money really wanted the market higher a good 400+ point Friday would be an excellent end to the week, but they didn't seem to allow that. It was a strange occurrence. I really can't explain it, there are plenty of gurus out there who will.
I never feel confident in these calls-they go against all common sense, the only thing that gives me confidence is my experience with 3C. Just a few weeks ago it called this rally a week ahead of time, the charts were posted a week before.
The collapse in oil 3C predicted didn't make sense after a 5+ year rally, the dollar jumping is December 2009 didn't make any sense. It's almost always the case that these calls do not fit with your logic so I really try to not figure it out, it's kind of a waste of time as the real reasons come out later and had nothing t do with what you thought.
I still like what I see in 3C, I like what I see on the institutional holdings-those fit, they make sense. The Tepper rally was based on one man's words at the perfect time at the perfect place.
Now I have to get to my analysis.
John, yes that was a very bullish day and certainly could be taken as confirmation. However, I've studied many top reversals and bottom reversals, they all start their reversal with a big move that seems to break some technical level or pattern and then fail. We'll only know when we see the events unfold. We have a lot coming out this week.
However for such a bullish rally, it is strange to see the big stocks being sold off in confirmation of what 3C has been saying. In such a thin market, a reversal to the downside could be devastating.
Oil did the same thing before it reversed, the dollar index had a major breakdown right before it reversed. This simply is not a free market anymore, if it ever was. The fact 3C predicted this rally is proof enough that the powers that be control where the market goes-at least in the short term.
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