Accumulation - Distribution - None of the Above

[kam75]

OBV rising = accumulation
OBV falling = distribution
OBV flat = profit taking or inactivity

 

[motorway]

What does Accumulation do

It makes stocks that start a trading range Dear
finish a trading range Cheap

This involves Volume ( change of hands )
But also expectations ( the more important ? )

Expectations change as swings up and down test the upside and the downside of the range.

MOF is weaker than the market
it made a bullish statement off the low
That ended the down trend ( or at least has created a pause )
Broken the downward stride and taken the "work" through the trend channel

The rally from the low is weak
and the trend has turned down again with the recent column

( drawn some trend outline lines )

The earlier congestion zone was a weak pattern
But could have been Preliminary demand
IF so the bullish statement off low ( spike reversal )
Was a Selling climax

The automatic rally has moved sideways
And a secondary test will help reveal what the "Work" across the top since . was...

Or maybe that ground can be held and some sort of rally ensues

Every reversal of trend now could be definitive..


The sponsorship has been aggressive ( but to the down side )
conforming to the 45 degree diagonal
( This will be in memory of weaker hands )

POINT --->ENDS need not be New Beginnings

That is why the right question has be asked

Is there accumulation....

The subsequent responses are what reveal ( the response to each change of column whether step backs or changes of trend )]

And it is the lack of follow through that builds cause


This chart is scaled
commensurate to the 75 pt XAO chart
IS the stock ahead or behind
as regards buying and selling waves ?

Aggressive Accumulation the stock should be ahead

click to expand


motorway

 

[Timmy]

Motorway - one question re this MOF chart please.

The volume histogram on the right hand side of your chart shows huge volume having built since about January between 16 and 22 cents (pic attached). Has this volume build (and I assume it is transfer of ownership) contributed to your view here?

 

[motorway]

The number of price
changes and the manner in which they combine themselves have a more scientific foundation
than the influence of volume in the anticipation of price movements.

We must have volume , and volume is important
But I have seen large volume build across rows like this and lead nowhere
or opposite to what might be expected

PRICE CHANGES VERSUS VOLUME
Let us analyze the effect of the influence of volume as against the effect of price
change only. What is the aim of all methods which seek to anticipate stock price movements?

Good Question .... The very Hub !

Do we seek to know how many shares are exchanged? Or, do we
desire to determine whether stocks are passing from weak holders into strong
hands and vice versa? All will agree that it is the answer to the latter question which will permit us to profit most from our knowledge.

Accumulation Distribution or Nothing---- Volume can be Nothing
unless there are strong hands

What is a stronger hand ? One buying or selling operating on a longer time horizon than the one they are buying or selling from/to .

( OBVIOUS--- If we are on the the same time frame there can be lots of volume ( effort ) But NO RESULT of any consequence )

BUT there is always PRICE VOLUME & TIME VOLUME is always VERY IMPORTANT

The P&F chart boxes are an aggreagte of all three qualities

Taking for granted the
known fact, namely, that each transaction printed on the tape is at the same time
a purchase by one and a sale by another, it is of little consequence to know the
exact number of these transactions. What we desire to ascertain is where in the
price scale they occur and their relationship to each other.
Let us approach the problem in a logical manner by taking note of the definitely
known elements, in order to determine whether price changes or volume
have most influence.

In a speculative market, where the laws of supply and demand are operative, we
must have fluctuations in prices. These fluctuations are due mostly to differences
of opinion

Every vacillation of HOPE AND FEAR
DISGUST and GREED...

Experience has taught us that a great number of fluctuations in a congestion area usually
indicates either accumulation or distribution. When stock is offered for sale at the
market, we must take the nearest bid price; and when one is anxious to purchase
a stock and offers to take it at the market, he must pay the nearest asked price. The
price changes of a stock, as it moves from one price to another, are caused by the
difference of opinions of those who are buying and selling. These fluctuations have
proven themselves more informative for our purpose than has volume.

VOLUME is EFFORT always ask what is the result

VOLUME is Trades that happen for whatever reason

CAUSE is as much the volume traded as volume withheld

The selling that did not happen on a particular swing

Furthermore, let us consider the effect of supply and demand on any product or
commodity, be it stock, equities, or horseshoes. When demand is greater than
supply, prices move upward. Should supply be greater than demand, then prices
are forced downward. When demand has absorbed all the supply at any given
price, it will begin to absorb the supply available at the next higher price at which
offerings are available. As the demand increases, prices correspondingly
increase. Prices recede as a result of absence of demand or an oversupply.
These factors show that price, as such, holds the key to supply volume as well
as to demand volume.

Volume, as well as price fluctuation, can be artificially manipulated. Manipulations
of volume at any given price level are deceptive and cannot reveal the difference between true and artificial demand. As contrasted with that principle, consider
how easy it is to detect artificial support resorted to for the purpose of distribution
when many changes in the price of a stock show that it cannot absorb the
supply at the upper registered level, or that demand is insufficient to reach to the
next level of supply. This principle becomes more clearly apparent as you compare
these conditions in one particular stock with the market and other stocks. Volume
indications have a tendency to vary greatly with the changes in the floating supply
of stocks as well as changes due to the open short interest in the market. We,
therefore, conclude that price changes of themselves, with their relationship to
each other and to the market and other stocks for comparison, are vastly superior
than is volume, used with any other combination. Herein, then, lies the vital and
vast superiority of the use of price changes and the Point and Figure Method.

STILL----- Volume is important and one can go back in time and play that MOF chart forward day by day and watch the volume "come in"

all is DEMAND and SUPPLY
all is CAUSE AND EFFECT

and thirdly There must be EFFORT AND RESULT

But to have any effect one needs a cause to build
This is the change in expectations that are the turning points

What is PRICE ( easy ) what is VALUE ?
The answer involves expectations

This is what support and Resistance is
and there is support as long as expectations do not change..
and differences of opinion hold

With the P&F chart
we already ALWAYS have a totally optimized chart

And No new box forms unless there is change in all three of Price Volume & Time..

The columns of squares are designed
so as to permit the plotting of true trend lines and to force the development of
true geometrical and symmetrical patterns which facilitate accurate comparisons
and dependable diagnosis.

True True True ...

A Manipulation Detector
is there accumulation or just 1001 brokers shuffling paper

The downtrend = 100% manipulation ( like SOROS definition very old idea )
This sideways movement ?

True geometrical and symmetrical patterns will facilitate accurate comparisons
and dependable diagnosis

Volume is important
But needs context
It is only one element that weaves the boxes of the point and figure chart.

Interestingly the topic of the thread
is an old Richard Wyckoff quote WAVES & WINKS are as good as a nod

motorway

 

[MRC & Co]

The downtrend = 100% manipulation ( like SOROS definition very old idea )

motorway

Hi motorway,

What do you mean by Soros definition that the downtrend = 100% manipulation?

 

[motorway]

BACK TO THE 5TH OF MARCH

Give an idea of the dynamic nature of P&F

The chart is a continuous flow

OK Now we have the volume appearing at the earlier congestion

~ .28 That buying was DUMB and too early
Sellers; we knew we had them... one look at the pattern of fluctuations..

Finally met some buyers.... Difference of opinions emerged

HOPE met FEAR.... But you know Hope sometimes makes you stay on a sinking ship.. Hope was the one ILL that remained in Pandora's Box ..

Congestion will always tend to equate to volume

From here a real bout of fear took hold
and even more hopeful buyers

No new low ground
and a reversal ended the down trend

A significant zone of one box movements

ceiling or floor ?

That price could not move higher makes a negative statement..

Work was done energy transferred
a high or low was built from the changing expectations

motorway

 

[motorway]

Hi motorway,

What do you mean by Soros definition that the downtrend = 100% manipulation?

In his most recent book
he uses the word manipulative = reflexivity

demand and Supply are not independent they are the same thing
because everyone is trying to make a BUCK = Manipulating

The
shape of the supply and demand curves cannot be taken as independently
given because both of them incorporate the
participants’ expectations about events that are shaped by
their own expectations. Nowhere is the role of expectations
more clearly visible than in financial markets. Buy and sell
decisions are based on expectations about future prices, and
future prices, in turn, are contingent on present buy and sell
decisions.

To speak of supply and demand as if they were determined
by forces that are independent of the market participants’ expectations
is quite misleading. Demand and supply curves
are presented in textbooks as though they were grounded in
empirical evidence. But there is scant evidence for independently
given demand and supply curves. Anyone who trades in
markets where prices are continuously changing knows that
participants are very much influenced by market developments.
Rising prices often attract buyers and vice versa. How
could self-reinforcing trends persist if supply and demand
curves were independent of market prices? Yet, even a cursory
look at commodity, stock, and currency markets confirms
that such trends are the rule rather than the exception.

The very idea that events in the marketplace may affect
the shape of the demand and supply curves seems incongruous
to those who have been reared on classical economics.
The demand and supply curves are supposed to determine
the market price. If they were themselves subject to market
influences, prices would cease to be uniquely determined. Instead
of equilibrium, we would be left with fluctuating prices.

Understanding a situation and participating in it involves
two different functions. On the one hand people seek to understand
the world in which they live. I call this the cognitive
function. On the other, people seek to make an impact on the
world and change it to their advantage. I used to call this the
participating function, but now I consider it more appropriate
to call it the manipulative function.*

This is the same idea behind age old tape reading..

motorway

 

[motorway]

Hi motorway,

What do you mean by Soros definition that the downtrend = 100% manipulation?

MRC -- also in the angle of 45 = no fair coin toss

Other stocks eg TLS much subtler
Drifting downtrend
A Suckers Stock

But clear on the 5 box reversal

.10 is the same scale as MOF
but sneaky downtrend that keeps hope alive


motorway

 

[MRC & Co]

Thx motorway, some good posts there, his concept of reflexivity is so simple, and so obvious, I am surprised he is still fighting the battle.

 

[motorway]

Motorway - one question re this MOF chart please.

The volume histogram on the right hand side of your chart shows huge volume having built since about January between 16 and 22 cents (pic attached). Has this volume build (and I assume it is transfer of ownership) contributed to your view here?

A significant thing to grasp is how different
Intrinsic Time is to clock time...

P&F is a historic name from a period in the 1930's

The earliest known name is a Fluctuation Chart..

Today it would be called an "Intrinsic Time" chart

Volume has to be considered in terms of How fast Time is Flowing.
When Boxes are forming slowly They will tend to fill up with volume
They become heavy --> Great for forming bases ,not so great in ceilings..

When Time speeds up The Boxes have wings ... Differences of opinion are absent.... And there is no waiting for Volume

Volume is related to "populations of interest"

Speed = Velocity ... This is the trend is your friend

But the only thing we can say about it --- Is that it will end = opportunity

( something eg Soros and P&F chartists are looking for )

change of Velocity = acceleration

Here we have the building of potential
the swings have MAX acceleration at their end points

change of acceleration = Jerk

This is the "Jump"

It is what happens when you are on a fast old train that lurches into a sharp corner... it "HERALDS"....

It is this Volume that matters
When the volume comes in and the Behaviour changes..

When dealing with Intrinsic time ... Distance ,velocity, acceleration, & Jerk
are very real parameters... Not the empty ROC or MOM or RSI or even OBV of static time....

large Volume = large population of interest

But it is change relative that matters and the result that ensues

Demand and Supply are the one thing
They tend to generate each other and destroy each other

To move from static time to intrinsic time
--->To a test response paradigm is light years away from the overlaying of indicators built from clock time..

Take OBV If you can not think of two things wrong with it ( without trying )
You are like one wearing a blindfold .


A quick look at the OBV shows a bullish picture from the bottom of the reversal until about the 12Th may

But really effort has produced a poor result
I see upthrusts and Signs of weakness..

There are large populations of interest ( interested in trading-- cash for shares.. shares for cash )..

Sellers have generated Buyers



A factor not discussed in the thread is the ( comparative ) changes in relative strength.... Important...

Accumulation would
absorb the volume
The chart will slow
and start to rally ( mid pattern )

When demand has absorbed all the supply at any given
price, it will begin to absorb the supply available at the next higher price at which
offerings are available. As the demand increases, prices correspondingly
increase.

Large Volume is always to be noted
Volume is always important
When there is change of ownership
from weak to strong
Then the technical position changes instantly
and what was Dear become Cheap

But hard to buy

motorway

 

[motorway]

A weak hand is also someone who is under water holding their breath
Who bought at the high and held on in shock as it tumbled down

How much changes when they stop holding breath ( a given )
and either reconcile to the new price range or sell out to someone
who now has a cost base below the current price (a Stronger Hand )

The Chart has swung back up making a higher low (The immediate trend is now up) coming off a halfway point

Right in the middle of the zone of massive volume

How much is the massive volume just a fact of the low price

The action from this low
was very measured and manipulated

Went for a walk up the stairs

But Why ?


If there is Accumulation ( Manipulation ) ( or Distribution )

Support and Resistance
will move forward at an angle
in a Dynamic Manner

The classic Angle of Manipulation is 45 degrees
and it is always present in some form


motorway

 

[motorway]

Here is the .02 chart

motorway

 

[motorway]

A factor not discussed in the thread is the ( comparative ) changes in relative strength.... Important...

I know these trusts are held for Income ( the Managers Maybe ? )

And for Buy and Hold Types

So this intermediate CRS chart
could be a starting point

ZERO point is 21/11/08
and The % is compared to the XAO

It has never pushed through Resistance
( Dynamically moving forward )

EVER

But There was a Significant Reversal from the ultimate LOW

Fundamentals that would matter
Are the Obvious ones

But esp the outlook for interest rates
Which have been falling


motorway

 

[Timmy]

Thanks Motorway - wow that comparitive chart (post #33) - an income is nice but at what price?
Well, at the price of capital preservation/growth in this case ... that is a truly ugly chart!

Re the chart in post #32, the 0.02 chart - what do you think of the sideways move that
has broken the downtrend 45 degree line (in red). If this chart was time-based.
i.e. daily/weekly/whatever bars then the break of the down-sloping
trend line could be attributed to the simple passing of time but on the PF it is
attributable only to work being done - does this move give you any confidence
that accumulation is occuring? I suppose I am asking also that if it does
signal to you that some sort of accumulation is occuring how much
confidence does the sideways move give you ...?

 

[sagitar]

JohnnyG - I think you've started an interesting thread. I just wanted to throw something out there to think about or for others to comment on if they like. I think it's particularly important to note that when one looks at a chart over a medium-to-long term for a stock that has experienced a large shift in price over that time, you typically find that volume will be higher at lower prices. This is obviously due to the fact that the same amount of money traded at lower prices buys you more shares (hence, higher volumes).

Now, if it was possible to plot the value of a trading day (as opposed to the volume of shares traded) perhaps that may provide a better unbiased indicator of accumulation/distribution. Anyone know if that can be done?

Alternatively, how about keeping one's eye on several of the Money Flow indicators around to gauge the level of accumulation / distribution. There's also the smart money indicator that Nielson promotes although I haven't tried it myself - looks interesting though.

Just my 2c worth...
Cheers

 

[Timmy]

Now, if it was possible to plot the value of a trading day (as opposed to the volume of shares traded) perhaps that may provide a better unbiased indicator of accumulation/distribution. Anyone know if that can be done?

Yes this could be done by most charting software packs that allow 'custom indicators' to be built, given the correct data. Even just using EOD prices would give an approximation of the $ turnover.

 

[johnnyg]

Got some help from Radge's Forum and was able to get your idea coded up into an indicator sagitar.

As you can see although volumes picked up in the last 10-12 weeks (weekly view) weekly turnover has actually been falling off. In saying that it seems MOF's made a good move in the last 7 days.

Ill need to look into the idea a bit more and see if I can see any patterns/confluences as to whether or not its a worth while indicator.

I also need to have a good read threw Motorways post when I have a spare hour or so.

 

[sagitar]

Looks interesting JohnnyG - did you use a formula to derive the volume-related values? I suppose one could plot vwap x daily volume to derive an estimate of value traded per day. If you find any interesting relationships I'd be keen to hear.
cheers

 

[johnnyg]

Here's another interesting chart I came across over the weekend.

 

[beamstas]

Here's another interesting chart I came across over the weekend.

Johnny, if it's buyers then how can the closes be low on the bar?