"Dark Pool Quiet Rotation Patterns" by Martha Stokes CMT

Time Segmented Volume Indicator Reveals Dark Pools

The Securities and Exchange Commission has investigated the practices of giant Buy Side Institutions using Dark Pools, and it has been proven that they are not getting any price advantage. Dark Pools are used to hide the giant lot orders of Buy Side Institutions, and to ensure that when the giant lot orders are triggering there is no major disruption of the current trend of the stock.  

If you are new to trading, this is critical information to learn. It is a major Market Structure change that has altered everything about trading stocks, and continues to change Price and Volume Indicator patterns today.

The following are 3 major Dark Pool patterns caused by giant Buy Side Institutions which Retail Traders need to learn:

 1. Dark Pool Quiet Rotation Patterns

 2. Dark Pool Quiet Accumulation Patterns

 3. Dark Pool Quiet Distribution Patterns

The Time Segmented Volume Indicator can reveal Dark Pool Quiet Rotation Patterns occurring in a stock, which is the hardest to see and happens even while price is going up.

Most Retail Traders learn Accumulation and Distribution patterns, which are broad terms. Unfortunately QUIET is very different now with Alternative Trading Systems venues that are used by the giant Buy Side Institutions. The term “quiet” means it is not visible in the chart, unless you use specific indicators and have learned what to look for in price action.




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Many Retail Traders are prone to sticking with outdated methodologies, strategies, and trading systems so it is a leap of faith for them to accept the new reality of stock trading. However until you learn the Dark Pool patterns, trading profits are likely to be a disappointment.

Dark Pool Quiet Rotation Patterns differ from Quiet Distribution. The term Quiet Distribution refers to a mandatory selling of shares of stock held in trusts and charters. Giant Funds Managers of Buy Side Institutions do not wish to sell the stock, but are forced to do so based on sudden huge redemption demands by their uninformed Mutual Fund Investors. Distribution dumps a huge amount of stock for sale suddenly, removing money from the Stock Market so there is an outflow of monies aka funds.

Rotation is always quiet these days and well hidden from view, and eventually it may cause a topping action. Dark Pool Quiet Rotation Patterns do not remove monies from the Stock Market. The Giant Funds Managers of the Institutions are merely moving money around from one stock to another.

The chart example below has been under Dark Pool Quiet Rotation for some time.


time segmented volume indicator chart example - TechniTrader


The TC2000 Time Segmented Volume Indicator is a Volume Oscillator in the middle chart window, which clearly reveals a contrarian Volume pattern or that Volume is heavier on the sell side than on the buy side. 

The MoneyStream MS Indicator in the bottom chart window, reveals that the flow of money into this stock is not keeping up with the fast pace of the Retail Traders Market Participant Group and the Smaller Funds Market Participant Group buying into it.

The giant Buy Side Institutions use these two Market Participant Groups as a cloak to hide their Dark Pool Quiet Rotation Patterns. By not disturbing the trend but allowing the stock to climb higher due to Retail Traders and Smaller Funds buying patterns, the giant Institutions actually benefit as they sell hidden in their Dark Pool Alternative Trading System venues.

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Summary

When the Time Segmented Volume Indicator starts heading down and diverging contrarily from the price action, it is a critical point which all traders need to recognize. If you are not aware of the heavy Quiet Rotation out of this stock, buying into it could end up being a serious major loss. This stock gapped down after barely rising above a prior resistance level.

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Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a TC2000 chart, courtesy of Worden Bros.

Chartered Market Technician
Instructor & Developer of TechniTrader Stock and Option Courses
TechniTrader DVDs with every course.

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