The stock market is a competitive place… and if you’re a trader, you should aim to collect as much info as you humanly (and “machine-ly”) can.
After all, knowing more than others or knowing it quicker may offer you an invaluable advantage.
Seriously, we don’t even care where the data comes from!
As long as some parameter stands out, some piece of the puzzle seems off – this “oddity” catches our attention, as it may provide an insight into what’s next for a stock.
Raging Bull’s Ben Sturgill is no novice at digging through unconventional data – finding market clues through his Dark Pool method.
And right now, Ben’s Dark Pool scanner is recording some highly unusual activity in one of the world’s hottest stocks – AMD.
Let’s explore what that means and what may come next.
What Are Dark Pools?
But first, let’s cover the basics – what exactly are Dark Pools, you may be wondering?
See, a dark pool can be thought of as a “secret exchange”, used generally by institutions.
Its purpose is simple – to facilitate large “block” trades between big funds.
Imagine this: you’re a portfolio manager at a fund, and you need to sell 1,000,000 shares of Nvidia (NVDA) right now.
You can go to the open market and put a huge order out, but that could tank the price!
Or, you can go to a dark pool – where you may find another fund looking to buy 1,000,000 or, say, 500,000 shares of NVDA.
The two of you just have a direct big “block” transaction between each other, without affecting the general market!
See how this works?
Dark pools allow big players to instantly trade their huge positions directly between one another, without putting the pressure on the public bid and ask.
Now, you HAVE to be one of the big guys to trade in the dark pools… but there are ways to monitor these trades and that’s exactly what Ben Sturgill does.
And the recent “big boys’” trades in AMD action couldn’t help but catch his attention.
AMD’s Buying Streak
Check out this AMD buying in the Dark Pools on February 15th:
Just that one screenshot alone are buys of nearly $400M worth of AMD shares!
That’s a lot of cash! And shares!
So what exactly does this mean for the stock?
See, AMD has spent the past few days in a fairly right $114-$122 range.
By the looks of the dark pool activity, somebody is definitely betting that the stock will break out to the highs.
Not that the big boys can’t be wrong… but this is an unusual amount of buying, especially when the market is as turbulent as it is.
Personally, I see bullish scenarios:
- AMD retests $114, holds up well, and then bounces much higher with the overall market.
- AMD just grinds higher through $122 – at that point, I may go long against the level, which should turn into support.
If the stock and the market continue to slip and flush past $114 – too bad for the dark pool guy who loaded up!