Spotting Institutional Accumulation | Podcast Episode #492

0:00
Hey everybody, this is Ryan Mallory with shareplanner.com’s Swing Trade in the Stock Market. In today’s episode, we’re going to talk about spotting institutional accumulation, and it comes from a comment that was made in the trading block on my Discord. And a person was wondering about how do I spot that now as I do with all of my emails or questions that I receive?

0:23
I don’t use your real name. I use a fake name. Usually it’s a Florida redneck name, unless you tell me to use otherwise. Like somebody gave me a South Kakalaki name from last week. I guess that’s also redneckish for South Carolina this week. He doesn’t give me one.

0:38
So I’m going to make up one. It’s going to be Skeeter from Okeechobee. And if you’ve been to Okeechobee, which is like right there in the middle of the state, you know that there is some the biggest Skeeters out there, I mean, massive ones. So fitting. Skeeter from Okeechobee. Skeeter from Okeechobee writes.

0:53
Hey, Ryan, would you consider doing a podcast on what to look for when it comes to institutions accumulating a stock? I know we want to get into those stocks and some tips and tricks on spotting accumulation would be helpful. Sincerely, Skeeter from Okeechobee.

1:09
OK, so lots to unpack there. Simply explain institutions that’s like your mutual funds, your hedge funds, your pensions, they quietly or tend to be quietly buying shares to accumulate large positions. Now you can have big institutional accumulation, like when a stock is added to the S&P 500, for instance, Block or XYZ was just recently added to the S&P 500.

1:33
So there’s a lot of accumulation that takes place there. And, and when that happens, they have to get it into all the ETS, the different hedge funds that might be tracking that particular index. So that’s one way that institutions can accumulate. So if a, if people think or that it’s rumored that a stock is going to be added to the S&P 500, you might see retail trying to jump in ahead of it so that when the institutions are forced to buy, they’re, they’re able to make some money from that.

2:00
But it can be pensions, hedge funds, like I said, mutual funds, they’re quietly buying shares in large quantities over time to build large positions because they can’t just go market order into an entire position. When I get into my swing trades, I’m not just, well, for me, I can go ahead and get a full position right away.

2:17
I’m not moving the stock. All all the subscribers that I have, they’re not going to move the stock. But you get an institution and they all of a sudden start pumping billions and billions of dollars into a stock. Yeah, that’s going to move it. Even Apple will move from that kind of a thing.

2:34
So think of institutions like, like professional sports fishers, right? When I go fishing with some of my buddies, these guys are some of the best fishermen that I know. And living, living on the Space Coast, we have a lot of, of really good fishermen out there.

2:51
Some of them that I, that I know personally, they, they fish on TV, all that stuff. I don’t hold a candle to these guys. And I’m, I’m like the casual fisherman, right? I’ll go when somebody’s putting the boat out and they ask me and they need somebody to tell some jokes on the, on the trip.

3:09
I’ll be that guy, But what nobody brings me on the boat is to tell them where to fish or how to fish because they just say, Hey, you know what? You bait your own hook. You, you tie up your own line, you, you do your thing, you can come along, but don’t tell us how to fish or where to fish.

3:27
And I don’t tell them because I really don’t know what I’m talking about. These guys, they have GPS coordinates of all the different places. Like right now it’s snapper season and these guys know all the locations. They are so efficient when it comes to snapper season.

3:43
They’ll go out of the port and they’ll go right to Agps location at midnight. They’ll drop 3 lines in there. They’ll have three of us on the boat and then within 10 minutes they’re limited out. They come right back in that good. It is not like a very long fishing trip at all.

3:59
They go, they get their snapper and they come right back to to the docks. Those are guys that know what they’re doing. They’ve been doing it for a long time. And I consider institutional investors to be the same way. And so for me, I want to know, I don’t have a boat, but if I did have a boat, I’d want to know where the, the fishermen, the, the good ones like my friends that I was telling you about, I would want to know where are they dropping their lines at?

4:28
I would want to know where are their spots. They don’t give up their coordinates easily. But what where it’s kind of cool with trading is that with trading you have charts and it’s almost like the equivalent of fishermen.

4:44
These really good fishermen, if you could watch them on a map and know exactly real time where they’re dropping their lines and then you can say, OK, they’re at that spot. That’s where I’m going. And it’s the same way with institutional investing. But we have the charts to tell us now.

5:00
Then you ask yourself, well, how do we know what the charts are saying? Well, it’s easy. It’s volume and price. Price action will tell you. And when you see large volume accumulation, that’s typically not retail, that is accumulating, that is your institutional investors, especially when it’s really, really strong volume.

5:20
Another good way to be able to spot institutional investors is when the market’s selling off, but a particular stock is not. And it’s showing resiliency. That means people are rotating into that stock. Not just people, but mutual funds, pensions, hedge funds. If you’ve noticed of late when NVIDIA sells off or when you have a big broad tech sell off, you’ll notice that money rotates into Apple.

5:44
How do you know that? Because Apple holds itself up extremely well during those times. It doesn’t actually go anywhere. And so you’ll see relative strength and Apple while the rest of the market sells off. And then when the market wants to start rallying again, you’ll see that money rotate out of Apple and into NVIDIA.

6:01
Now in a very short time frame is what I’m talking about here. But that is nonetheless institutional rotations that are taking place. And so one of the best things that you can do is to watch the sectors. And I use a top down trading strategy and I’ve talked about a bazillion times and I won’t go with too much into the details, but one of the key components of the top down trading strategy is the sector analysis.

6:25
And why is the sector analysis so important? Because it shows you from a much broader picture where the money is flowing into. And if you can spot which sectors are moving and then which industries within those sectors are moving, then you can narrow it down to a handful of stocks that are likely moving that that industry that’s moving that sector that’s ultimately aiding the market to move higher as well.

6:47
And so if you can tell that technology is on the on the move and it’s rising, it’s not because of retail that is rising, it’s because of the institutions they’re accumulating. And you start seeing that it’s being accumulated at a high volume price is moving higher.

7:03
And then you start looking at, OK, it’s pretty obvious the semiconductors are moving well, which stocks within semiconductors. And then you start looking at NVIDIA and how it’s leading the charge and, and Broadcom heavy accumulation going on in Broadcom for a while now. So you can track that. Another good way that I like to to track institutional accumulation is volume by price.

7:23
I think that’s a great way to be able to put volume per price level. And so we’re used to typically just being volume bars by by time. You can also overlay volume by price. So if you have a, a chart that you’re looking at in the range over the last six months for a stock is from $50.00 to $100.

7:41
You can see the price levels at pretty much every dollar increment if you want. Or you can look at it from every $5 increment, but you can see how much volume has been coming in there. Reason why that’s important is if you have a large bar of volume at let’s say $75 and price is coming down and then a free fall from 100 and it hits that 75 and you start to see some support, but you also see a large bar of volume at that $75 price level, then you know that there’s some institutional accumulation.

8:07
And another way to help yourself, whether it’s institutional accumulation or just learning how to trade in itself or using my top down trading strategy is to check out my course, The self-made Trader. When you go to shareplanner.com, click on Academy and you’ll be taken to myself Made Trader course and right there you’re going to get over 25 hours of instructional video from me.

8:30
It’s over 100 modules and tons and tons of topics that are being discussed. It takes place over a 14 week period of time. It is one of the best and not the best course out there for your trading development. So check that out in the process you’re, you’re supporting the show and greatly aiding your trading journey.

8:48
So check that out at shareplanner.com. Now a lot of people may get into indicators. I’m not a huge big of indicators. There’s a lot of indicators out there that’ll say that they track institutional accumulation. I’m not a big fan of those. I think too many people use them and I think they’re highly inaccurate.

9:05
So I don’t I don’t follow after those. Now a lot of people also get into insider trading. So you can have CE OS, you can have directors, you can have vice presidents, anybody that’s in a high level of authority within a company. CFOSCTOSCIOS when they sell shares, people think that that’s a bad thing.

9:25
It’s really not. I really don’t think there’s any merit, good or bad to an insider selling shares of their company. And the reason why is because they got to live like the rest of us. You know, they might live a little bit more lavish, like they’re selling shares to buy yachts, Ferraris and lambos. Whereas, you know, all of us, we’re just selling shares to be able to afford a cart of eggs and A and a gallon of milk, right?

9:48
They’re not in that boat. They’re definitely funding a much more lavish lifestyle than us, but in this in the same note, they’re selling it for personal needs. That doesn’t translate. Just like I always tell you guys, don’t try to interject your personal needs and wants and desires into the market because those are variables the market doesn’t care about.

10:07
In the same way, the market doesn’t care about insiders and their reasons for selling when they sell it, whatever it doesn’t necessarily mean unless they’re trading off of insider trading, which is illegal, they, they’re not allowed to do that. There’s, so there’s insider trading, There’s also congressional trading.

10:23
This is something that’s really cool on the trading block. I actually have a feature on there that allows you to be able to see congressional trades. And so if you go there, you can find out everything that they’re doing on the congressional side. As soon as they, they, they make their filing, that gets pushed out to the trading block.

10:40
Really cool feature there. But what you’ll notice is that there’s a lot of congressional trades and I don’t think all of them necessarily mean that they’re good traders like you have with Jory Taylor Green. I wouldn’t necessarily consider her a great trailer trader. I can’t confirm that necessarily, but I haven’t seen anything that’s really jumped off the off my, my off the filings.

11:00
It’s like, wow, this woman knows something. Nancy Pelosi, on the other hand, legend, I, I don’t know what the heck she knows, but man, somebody’s tipping her off on stuff or she’s in the committees that are telling her unbelievable amounts of, of quality information. You take Tommy Tuberville. He hasn’t even been in the Senate that long.

11:17
I actually met him one time at an Auburn game, said hi, he said hi back. I didn’t know who he was. I think he was just a ex coach at the time. I don’t know why I said that, but anyways, he, he’s a phenomenal trader, though.

11:33
I mean, he, he fools awesome, great trades. I wish when I had met him that I had asked, Hey, can I sign up for your daily watch list or, or your monthly newsletter that you might have in at some point in the news near future? It wouldn’t surprise me if there’s like a congressional newsletter that we all don’t know about.

11:52
If you know of one, please let me know. I would love to, to get the insights on that one. So you have the congressional trades, the insider trade. I definitely think the congressional trades trading is much more interesting than the insider. But then there’s that delay effect where they, they’ll make the trade, but then they it’s like usually like, you know, 25 to 30 days before they actually make the filing.

12:10
So you’re finding a way after the fact. Some people really get into the into the weeds and start tracking SEC 13 F filings. Not really something that I’m interested in. I don’t think there’s a lot of merit to that either. I don’t really follow that, but again, going back to the earlier points, what we do have is an incredible resource with the charts and with the pricing.

12:36
And I’ve talked about volume by pricing and I talked about how much different it is than just, you know, the traditional volume by time. I still like the volume by time better because I get a a better feel for what we’re dealing.

12:58
So if you have a stock that’s kind of flat lined or accumulating or in a bull flag, but you’re seeing like heavy accumulation in that bull flag, but the stock’s not necessarily going down, but the volume is extremely strong. And it might even be in a market like what we’re in right now in the summer months where the volume is not that strong. That’s usually a good sign that there’s some heavy accumulation, that somebody is placing some big bets on the future of the stock going higher. So I like to see that kind of stuff.

13:15
You take a look at NVIDIA a few years back, I guess this was probably like what, 2020 and 20? I think it was 2022, 23. I don’t know. I should have looked at it before I did this podcast episode. There was this like big inverse cup or inverse head and shoulders pattern and it was a huge level of of accumulation.

13:35
There was strong volume. And when it broke out, it went on this epic rally that we’re still seeing play out today. I wish I remembered what that was. Maybe I should have just looked it up before I did it. Maybe I can spot it here as I’m doing this podcast episode. Usually I don’t pull up charts and I’m not necessarily pulling it up for you guys, but just to make sure I’m giving you guys some accurate information.

13:53
Yeah. OK, so this was like 2022 when we were in that big sell off. There was this beautiful inverse head and shoulders pattern that formed in the middle part of that year and finally confirmed. It was like early 2023 when it finally confirmed like in January and it sent the stock from like 18 up to 172.

14:10
You’re talking like a really, really good return, like a like 1000% return from that doesn’t mean it’s always been sunshine and rainbows along the way. I had a pullback obviously this year alone that took it from 153 all the way down to the 80s, and now it’s back up to 172.

14:26
It’s doubled since April. Man, how crazy is that? So look for that accumulation. If you look at that accumulation with the inverse head and shoulders pattern in 2022, there was some, there was some serious accumulation going on there. And still, what I like, just like with NVIDIA, I love the volume by time and I like the price action because with it, you’re getting, getting that insider information.

14:56
Like with the fishing, you’re, you’re knowing where they’re dropping their lines, you know where they’re going to catch the fish. And so the charts provide that. That’s why technical analysis is so great because while the institutions have hundreds, if not thousands of people that can go and, and cover a sector or multiple stocks.

15:12
And they can call Apple and get probably phone calls with CF OS and CI OS and they can find out hard data that we are never Privy to. And they probably keep it for themselves. We can still see where they’re trading on the charts.

15:27
We can see when somebody knows something based off of their own research. So that’s why technical analysis is such a game changer for retail traders because it allows us to capitalize indirectly from the information that the institutions know about the trades. And that’s why we use technical analysis.

15:45
And if you enjoyed this podcast episode, and I hope you did, please make sure to leave me a five star review on whatever platform you’re listening to me on, whether it’s Spotify or iHeartRadio or Apple, make sure to leave me a positive review of those do mean a lot to me. Also, if you’re listening to me on YouTube, make sure to like and subscribe and tell me down in the comments below.

16:02
What are your tricks? What do you like to do to track institutional accumulation? And don’t forget, check out the self-made Trader. It’s my newest course. It’s my flagship course on everything I know about trading. 30 plus years of trading wrapped up into one course. It’ll teach you everything that I know and it’ll certainly aid you in your trading journey.

16:22
Send me your emails, send me your questions. I want to hear from you guys. I want to know what’s troubling you, what’s giving you problems in your trading. Thank you and God bless. Thanks for listening to my podcast, Swing Trading the Stock Market. I’d like to encourage you to join me in the SharePlanner Trading Block where I navigate the stock market each day with traders from around the world.

16:42
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17:04
If you have any questions, please feel free to e-mail me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.