How to Track Institutional Investment Flow Into the Stock Market
The main difference between individual and institutional investing is volume. Institutional trades can be large enough to effect the price of a stock or asset. As a result, exchange houses offer services to institutional investors that will hide the size of large trades---the trading is done in smaller lots, for instance. Institutional trades are watched by professional investors to gauge the direction of the stock market. The code term for institutional trades in the investment world is "block trade." In general, a block trade is a one of at least 10,000 shares of stock or $200,000 worth of bonds. Because these trades require a high degree of capital, it is assumed that most block trades are those done by institutions.
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Instructions
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Purchase a copy of Investor's Business Daily (IBD) or check out a copy at your local library.
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Locate the the block-trading section. There you'll find data for four sessions of trading along with the gains or losses for the day.
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Compare the price and volume charts for the day. Big pops in volume are usually signs of institutional buying. Compare that day's daily volume to the average daily volume over the past 50 days. In addition, volume percent change, also listed in IBD, provides a projection of the current day's volume.
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Look at the chart "Where Big Money's Flowing Now." This data also is provided on IBD's website---investors.com. Here you'll find a list of stocks with unusual buying and selling trends.
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Analyze the Accumulation/Distribution Rating. This metric weighs the amount of buying volume compared with selling volume over a 13-week period. The scale is from A to E, with "+" and "-" symbols to show finer degrees. This is a proprietary rating included in the IBD SmartSelect Corporate Ratings. It can be found online as IBD Stock Checkup.
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