15 replies to this topic

[selecto]

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From IBD: "Distribution in the stock market refers to the selling of stock by large institutions. Distribution is indicated by one or more of the major market indexes closing down on increased volume from the previous day... Our studies have shown that four or five days of distribution over a two- to three-week period are often enough to turn a previously advancing market into decline. Therefore, once you notice these signs of distribution, it is best to hold off on any further stock purchases, and perhaps even cut back on some of your positions, especially if you are on margin.

[pedro]

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From IBD: "Distribution in the stock market refers to the selling of stock by large institutions. Distribution is indicated by one or more of the major market indexes closing down on increased volume from the previous day... Our studies have shown that four or five days of distribution over a two- to three-week period are often enough to turn a previously advancing market into decline. Therefore, once you notice these signs of distribution, it is best to hold off on any further stock purchases, and perhaps even cut back on some of your positions, especially if you are on margin.

I'll let Tuffy speak for himself, but I'd note after having been reading his posts that several of these marked days might not qualify under his conditions .. which include thresholds for the magnitude of index declines .. the April 24 and May 8 drops were pretty small.

pdl

[tuffy88]

Pedro is right. Minor distribution days do not count. To count as a distribution day the price decline must be at least -0.02%(2/10th of 1%) I am at my cabin in the woods in Wisconsin this weekend and do not have the paper showing which days were distribution days, but the drop in price must be -.02% to count. Also if the market had had a major move up since the distribution day that would also cancel the distribution day even if it was within 4 weeks. The system has some pretty hard & fast rules, but there is some subjectivity in it. Also the 2 distribution days 2 & 1/2 weeks ago just barely made it to the threthhold of being distribution days. One was exactly a price drop of -.03%. At present there are 4 distribution days for the Nasdaq Composit & the NYSE Composit and 1 distribution day for the S&P500 & the Dow Industrials. If the 5th distribution day is a fairly minor one I might ignore it even though it would be the 5th one for Nasdaq within 4 weeks. So one can't get away from some subjectivity. Charles

[CLK]

It's hard for me to understand how a 2/10ths of 1% = a distribution day. If that is a static number that IBD maintains then ok. We are talking about a 25 point drop on the DOW though. It seems that over the last few years we got much more than that. So maybe the minimum threshold was never touched and made it more easily recognizable to most that an IT decline was coming.

[selecto]

The stuff I could find with some quick clicking at IBD, didn't mention the magnitude of the decline - just a lower close, although they do seem to like higher than average (50 sma) volume. I have seen others not requiring above average volume; they call an above average volume day a "heavy" distribution.
Clearly, if one were devising a system around "distribution or accumulation" days, one could require additional parameters, including price.

Edited by selecto, 13 May 2007 - 04:10 PM.

[Jnavin]

I believe Tuffy is on a cruise ship in the Baltics somewhere, so he went out of his way to post his answer on this thread. Thanks, Tuffy -- have a good vacation!

[tuffy88]

Not in the Baltics yet. Flying to London on Wednesday to board the Norwegian Dream on Thuresdayand then to the Baltics. In Wisconson this weekend resting & relaxing. Go to Investors Business Daily investors corner archives. Articles about defining distribution & accumulation days as well as confirmation days are there. Also in the Big Picture column on the front page of the paper daily. Nice thing about being retired is I don't have to be back to work tomorrow morning. Will be driving back after the rush hour traffic is over in the morning. Charles

Edited by tuffy88, 13 May 2007 - 06:39 PM.

[tommyt]

If I can ask where you are? I grew up near brewtown and spent all my summers growing up, in the northwoods, St Germaine, Woodruff, and Mercer...was always after that elusive Muskie with my dad. A beautiful part of the country really, the glaciers went though and left 10,000 lakes/woods. Enjoy!

[vitaminm]

Macro Market Analysis (End of Day)

Volume Analysis - Accumulation/Distribution
Accumulation/Distribution represents either the buying (accumulation) or selling (distribution) of market moving volumes of stock by large institutions. A series of 4 or 5 distribution days over a two week period can signal the need for caution.




http://tal.marketgau...Home/MGhome.asp

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From IBD: "Distribution in the stock market refers to the selling of stock by large institutions. Distribution is indicated by one or more of the major market indexes closing down on increased volume from the previous day... Our studies have shown that four or five days of distribution over a two- to three-week period are often enough to turn a previously advancing market into decline. Therefore, once you notice these signs of distribution, it is best to hold off on any further stock purchases, and perhaps even cut back on some of your positions, especially if you are on margin.

[tuffy88]

tommyt My cabin is on the other side of Wisconson from the area you talked about. Above(north of) Galena, Illinois and inland about 15 miles into Wisconson from the Mississippi River. In that triangle where Western Illinois, Eastern Iowa & Western Wisconson are joined. About 70 or so miles north of where I was born and brought up in Monmouth, Illinois. It is 9:00AM here now. I am all packed up & ready to hit the road back to Chicago. Charles