From this i can see which stock has the highest accum or distribution.
Any comments or improvements are welcome.
"always thinking & trying to find new methods"
Re: accumulation or disribution ?
· To: metastock@xxxxxxxxxxxxx
· Subject: Re: accumulation or disribution ?
· From: Harley Meyer <meyer@xxxxxxxxxxx>
· Date: Sat, 08 Aug 1998 16:41:06 -0500
· Posted-Date: Sat, 8 Aug 1998 16:47:39 -0500 (CDT)
· References: <35CBA488.EC7403E3@xxxxxxxxxxxxx>
· Reply-To: metastock@xxxxxxxxxxxxx
· Sender: owner-metastock@xxxxxxxxxxxxx
I am personally not very astute with end of day data accumulation or distribution indicators. But I do watch the market every day from start to finish with a nap (LOL) during the day some times. What i have found is that the close at the end of the day is important but might not be representative of distribution or accumulation. I have seen on many occasions a stock that was being accumulated greatly over several days.
Two methods I have observed are buy the ask with size and force a following. I use the word force instead of create because I have seen it where there is no following and then there was so much pressure with size on the ask that the followers could just like their chops. Who are the followers: Momentum players (SOES), other professional traders and the public.
The other method is support the stock on the inside market at the bid and mop up as many
sellers as possible. Two cases, one on an up tick and the other on a down tick. Supporting on an up tick after an advance of two or three days knowing full well that this inside buyer is going to take it higher with the help of short covering. The down tick support is a little less aggressive and might be showing some signs of over supply. (If you think about this it makes since. The large interest who is supporting the market on the inside is running low on resources and does not want to spend those resources on some one shorting the stock as opposed to eliminating someone who already holds the stock and is going to sell it. This person also wants to create a short term supply problem so they can wither go short or pick up shares at much lower prices and then continue the advance. Remember they are also selling during these advances as the price is being marked up.)
NOw what do I mean by supporting on the inside market. I keep track of the trades and break it into buyers and sellers by counting trades above or below (Bid + Ask)/2. ALthough this isn't perfect it does give me an idea of what is going on. Then I break it into an up/down volume. With any given stock the ratios very but the momentum or rate of change has value. When a stock has an up/down ratio of lets say 1.2 and then moves down
to 0.7 one would commonly see the stock move lower intra day. It also indicates that there is selling pressure when you look at a stock that trades between 7 to 10 million shares a day and the rate of change occurs with in an hours time.
When the stock stays at the same price or narrow price range under these conditions it is being supported from the inside market.
Lastly I have seen it where something in the broader market effects a stock that was going to go in the opposite direction of the major indices. For example the stock should and looked like it was going to close up slightly but way below the top of the trading range. But the DJIA rallies at the end of the day closing up almost 70 points above where it was an hour before the market was going to close. So the stock rallies as well now
closing at the top of the range. The same can hold true in the other direction. SO the short term distribution or accumulation is being postponed a few days.
To tie this together a stock may be under short term accumulation and it may not be present in end of day data because the advance may be being kept in check and the close is near the low of the trading range. This may happen for several days. Before the real
advance with the close now at the top of the range. Likewise a stock may be under distribution but yet the close is near the top of the range. Again this may be present for a day or two before the price moves down due to the selling.
I know I haven't really given you an answer to the end of day accumulation / distribution problem but hopefully it will give you some insight into helping interpret your results.
As a suggestion you may want to look over a range of two or three days. So let say you look over a range of three days. The price over the last several days were D,D,D,U,U,U,D,D,D,.... Where U is an up day and D is a down day. You would use an if statement and count the last down day before the up days as an accumulation day and the last up day before a down day as a distribution day. Then you might want to take some type of two day moving average of this to smooth things out.
You will have to set up some type of rule that if you have an U,D,U,D,... pattern you have a different rule.