How Sell Side Institutions Move Price: BuybacksThere are Buy Side Institutions, aka Dark Pools, and there are Sell Side Institutions, the Money Center Banks and Giant Financial Services companies. These two groups dominate the market activity and move price in entirely different ways and for entirely different reasons.
Sell Side Institutions are short-term TRADERS. They are not allowed, nor do they wish, to hold stocks for the long term. The Sell Side trades stocks and has the most experienced, most talented, and most sophisticated floor traders in the world.
Buy Side Dark Pools have floor traders as well but they are strictly long-term investment companies managing the 401ks, pension funds, ETF long-term investments on behalf of the Middle Class of America and, in some instances, other nations.
Sell Side Institutions may buy a stock and hold for a few weeks or months but strictly for the short-term profits.
The Sell Side are also the Banks of Record who do the BUYBACKS on behalf of the Corporation which has made the decision by the Corporation's Board of Directors to do a buyback program, which tend to last many months or longer. Corporations do not have stock traders on staff. So the Bank of Record does the actual buying of the shares of stock.
The reasons for doing a Buyback:
To lower the outstanding shares which can create some momentum runs during high buying demand from retail groups and other investors.
Buybacks are intended to move price UPWARD in runs. The price range is established by the corporation. The runs are created by the Bank of Record.
Buybacks also increase dividend yields for long term investors, including pension fund investors.
NASDAQ:AAPL has a mega buyback that was approved in May but has just started now.
Buybacks can be a great strategy for trading stocks this year as many corporations will be doing buybacks due to the reduction of their taxes and more benefits to corporations.
Now is the time to start watching for buyback runs.
