Follow The Institutions
Follow the Institution
"Recurring patterns occur over and over because stocks are driven by humans and human nature never changes."
By Jesse Livermore (Greatest stock trader of our times)
If you are new to investing, it's best to concentrate on a few critical rules to follow and acquire the expertise over time. You can start building on your knowledge by observing some basic principles and applying them to your trading and investing. Easiest ones to understand is to follow the lead of the institutions. They account for over 70% to 75% of the daily trading volume in the market. They can't really hide their intentions because it shows up on the stock charts as "Sky Scrappers" on the volume bars. Stocks often gap up and will advance very rapidly within a few days to couple of weeks. They will tend to rest after making a rapid advance and consolidate for a while. They will build a base before propelling higher.
Institutions will invest billions of $$$ when they decide to take a position in a stock of their choice. It takes them several weeks to accumulate the stock. Stocks will often gap up during its journey. Gap ups indicate that the institutions are willing to bid up the price of the stock just so they can accumulate a desired position in it. It's not unusual for a small cap, midcap or an IPO stock to gain 20% or more within 3 weeks when the institutions make a commitment to acquiring that stock. Big cap stocks however will tend to propel higher over a longer period of time and not gap up just because of the sheer high volume of shares outstanding. They also tend to be less volatile as a result.
Following is a list of 11 stocks that are the leading big cap stocks currently in the market. Institutions have been investing heavily into these stocks ever since coming off the lows we experienced on March 23rd. Some of them are extended now but could offer another opportunity to take a secondary smaller position in the current market. They have been consolidating the gains made since the 'Follow Thru' days of April 2nd on the $SPY and April 6th on the $NASDAQ. I have indicated in parenthesis, areas of support and consolidation for the stock. 9 of these 11 stocks are currently listed on the 'Leaderboard' (Premier Subscription Stock list of Investors Business Daily).
Stocks:
- $AAPL ... (327.85)
- $ADBE ... (386.75)
- $AMZN ... (2461.0)
- $FB ... (224.20)
- $GOOGL ... (1440.02)
- $MSFT ... (184.20)
- $NOW ... (386.57)
- $NVDA ... (350.51)
- $PYPL ... (149.18)
- $REGN ... (581.78)
- $UNH ... (306.71)
Currently have 2 positions on each of the following:
- $AMZN ... $1911.15 on Apr 3rd (+29.92%).
- $AMZN ... $2429.83 on May 9th (+2.19%).
- $NVDA ... $253.96 on Apr 3rd (+40.49%).
- $NVDA ... $353.01 on May 22nd (+1.07%).
Good luck trading this week. June is traditionally one of our weakest months for trading. We have only 1 'Distribution Day' each for the $SPY and $NASDAQ. That is a very healthy sign for the market to continue to propel higher.
Happy Trading !
Amin