Large Block Index
The Large Block Index is calculated from the number of upticks and downticks
in large block transactions of single trades of 10 000 shares and over.
An uptick is at a price higher than the last previous trade and initiated
by a buyer. A downtick is at a price lower than the previous trade and
initiated by a seller. The rationale behind the Large Block Index is quite
simple. It measures activities and extremes in institutional sentiment
and behavior. When the ratio of upticks rises to very high levels, it
indicates that the institutions are buying heavily, reaching a fully invested
position and therefore lowering their cash reserves.
Conversely, when the ratio of downticks rises to high levels, it indicates
that the institutions are selling and are raising cash. When the institutional
behaviour reaches extremes, the market will turn in a contrary direction.
This indicator has often signaled major reversals and has also prevented
investors from plunging into the market at the wrong time. The chart below
shows you this indicator on a 10-day moving average.
Home | Updated charts are available on WallStreetCourier.com
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