Tuesday, May 26, 2009

Distribution, it's come a long way.

A theory about Major Distribution Day; called a 90% down day is that a Major Distribution Day never comes along, so once the first one happens, there’ll be at least another one, unless a Major Accumulation Day kicks in, then the Major Distribution Day has to be recounted.

A theory about magic number three is, the 3rd time usually is different.

Now look at the chart, 2 previous Major Distribution Day, both cancelled by a Major Accumulation Day thereafter. Now this is the 3rd time we have a Major Distribution Day, so the question is: Will the 3rd time be different?

Here is a Thinkscript to identify MAD's and MDD's. Both Accumulation and Distribution days. They don't happen all the time. Running this every night will make them obvious.

declare lower;

input max_distday = 9;
input accumulation_or_distribution = {"accum", default "dist"};

def uVolume = close("$UVOL");
def dVolume = close("$DVOL");

plot baseline = 0;
plot distribution_day = max_distday;

plot volume;

case accum:
volume = uVolume / dVolume;
volume = dVolume / uVolume;

volume.DefineColor("Positive", Color.UPTICK);
volume.DefineColor("Negative", Color.DOWNTICK);
volume.AssignValueColor(if volume >= max_distday then volume.color("Positive") else volume.color("Negative"));

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