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.