>>> For every sell, there will be a buy. <<<
This is true.
>>> If all institutions are selling, then who are there to take all the shares/money flow to buy? <<<
All institutions aren't buying or selling, only those who are correct.
>>> So it has to be another set of institutions are buying. Am I right? <<<
You are right.
Studies have consistently shown that only 20% of fund managers can outperform the S&P 500. The 80% that can't, buy from those who do, along with the retail investor.
Nearly all funds must be at least 80% to 90% invested regardless of market conditions. That's the way their charters are written. So, even when they know a stock's price is going to fall, they still must buy. Just because they are buying, doesn't mean they are right. Most of the time they are wrong which is why they can't outperform the S&P 500.
The term, "institutions are buying or selling" is a technical term to help those who trade off the technicals to determine the immediate trend. After all, technical analysis is nothing more than identifying the trend, in the time frame in which you wish to trade and placing you on the right side of the trend.
When technicians talk about institutional selling, systematic selling or distribution, what they are referring to is that block trades of 5000K shares or more are going off at the bid. When block shares are going off at the bid, price is dropping. So, at the end of the day, you determine who won the battle, bulls or bears. If more volume went off on a down tick, as opposed to an uptick, the victory is given to the bears. It is said that distribution has won out the day. The volume bar on a chart is then awarded the color red to signify selling volume.
To take it a step further, when volume is above the daily average, it adds significance to who won the battle between buying the uptick or downtick. It is usually a giant red flag that is signaling that you manage your position. Protect profits or avoid buying if the above average volume signifies selling. Add to a position or take a position if the above average volume signifies buying.
Most energy related stocks have been seeing block trades being initiated on the downtick, thus it is said that institutions are selling. And the only institutions that should matter, are the ones that are correct, assuming we want to be correct on the side of the trade we enter.
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