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Evidence of Distribution
by Carl Swenlin
While persistently rising prices are frustrating the bears
and encouraging the bulls, there is evidence that distribution
is taking place.
On the first chart I have circled areas where daily volume
has scooped below its 250-EMA line, indicating that there was
inadequate sponsorship of the rising trend. In each of the
first three cases shallow volume preceded price corrections.
The current volume dip, which has lasted about six weeks, has
yet to be resolved, but it seems reasonable to expect a
correction fairly soon, probably starting soon after we see
final expansion of volume.
The second chart shows a five-week period of NYSE Member
Net Selling, which is a fairly unusual because these insiders
are normally accumulating shares into declines (shares that
will be sold during the next advance). The NYSE delays
reporting of these numbers by two weeks, so there is a big
question mark as to what Members have been doing during the
last three weeks; however, the large amount of net selling
raises a red flag, especially when viewed in the context of
the shallow volume problems discussed above.
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