Institutions accumulate shares from weaker traders during a stock base formation, creating support zones at the lows. They execute undercuts and shakeouts to shake out retail traders and take their shares before the longer-term trend moves higher.
With the base, that's just proper supply and demand digestion of a stock. Institutions accumulating stock off weaker hands, you know, maybe day traders, short-term swing traders. But when institutions betting on a longer-term trend to happen, they'll keep accumulating and creating that support, which is the lows of the base. Sometimes there'll be undercuts, shakeouts, and that's institutions grabbing that stock from the people and traders getting shaken out.
