80% of the market is controlled by institutions…
So, it’s no secret that the stock market goes where institutions choose to take it.
But while they want you to think they control your money, too – they don’t.
You have can use their best intel against them – and fatten your pockets in the process.
Here’s what I mean…
Everything You Need to Know About Institutional Price Targets.
First things first, it’s important to know that institutions use computer programs to control their buying and selling.
For example, if an institution wanted to build a position in Apple Inc. (AAPL), it would plug in price targets into the computer program and the program would then buy shares in AAPL until it hit a particular price target. The same applies to the downside should an institution want to offload AAPL shares from the portfolio.
But here’s what that means for you…
Because human beings tend to think in round numbers, these price targets tend to be in increments of five or ten, which creates support and resistance levels on a stock chart.
So, on the AAPL chart below, you can see turning points in the chart at increments of 10, which in turn, creates support and resistance levels. For example, you can see them at $220 and $230. The idea is that institutions will tell their computer programs to start buying at $210 and keep buying until the price reaches $220 and then again from $220 to $230.
And what we want to do is jump on for the ride and do the same thing…
The next piece of the puzzle is to increase probability by determining the conviction level of institutions. If institutions own 80% of the market, it makes sense that they also own 80% of the volume. Think of it this way:
Volume = Institutional conviction
So, as a stock breaks through these support and resistance levels on high volume, we can expect the stock to move to the next support or resistance level. Our next price target is the next five or ten-point increment or a support/resistance level created in the past.
This also works on the market indices.
The recent chart below on the SPY (S&P 500 ETF) illustrates this:
As you can see, we’ve got support levels shown at $280, $285 and $290 highlighted. On 10/4/18, the SPY closed below the $290 support level on a volume spike indicating that institutions intend to drop the market to the next support level, which in this case is $285.
There is also an intermediate support level noted as “Target 1.” After that, the next level of support is at $285 and then again at $280.
The trade plan in this scenario would be to short the SPY (or buy puts) and take profits at these support targets. You can also protect profits by moving your stops once the stock reaches these targets.
Here’s How to Play Institutions for Big Gains
Here’s a simple strategy breakdown…
For a bullish trade entry, look for this: stock close is higher than resistance. On top of this, look out for high volume…
Bullish Exit Target: Look for the next resistance level
For a bearish trade entry, look for this: stock close is lower than support. On top of this, look out for high volume…
Bearish Exit Target: Look for the next support level
Now this is just one of the many strategies you can use to maximize your plan to profit in the markets.
And as America’s #1 Pattern Trader, it’s my job to make sure you always have brand-new payday appointments to look forward to.
So before I sign off, I want to make sure you’re prepared for my next two payday appointments I’m sending out on Monday, October 15. Together, they could bring you 227% total gains in just a matter of weeks.
Because despite the recent sell-off, the major index drops, and the so-called “October effect”, I’m seeing a bullish run through the rest of the month on a handful of stocks I’ve been tracking for over ten years.
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America’s #1 Pattern Trader