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Hello Michael,
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.
Harley
michael wrote:
>
> i am always interested to know wheather a days move was an accummulation
> or distribution day for the stocks i follow.
> i believe that the close is important relative to the range of the day
> (not considering gaps- i haven't figured this one yet)
> so i wrote an eploration as follows:
> accummulation:
> cola: (C>(H+L)/2)
> colb: (C>(H+L)/2)*VOLUME {value of accummulation}
> distribution:
> colc: (C<(H+L)/2)
> cold: (C<(H+L)/2)*VOLUME {value of distribution}
> filter: cola=1 or colc=1
> 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"
> mike arnoldi
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