Robert,
There are 5 different accumulation/distribution formulas that I have in my software--Granville's On Balance Volume, William's A/D, Bostian's A/D, Markstein's A/D and lastly a generic Accumulation/ Distribution (Volume). All 5 are essentially flat up until May, '96 when massive Distribution started. On the weekly charts, you can vividly see a month long hiatus roughly in Jan 97, then a wicked resumption of distribution till mid March--now starting to narrow. These 2 periods of distribution, with a short accumulation pause in January, correspond to the distribution of the converted Reg S shares. On a daily chart, all 5 indicate neither accumulation nor distribution over the past month up till this past Monday. I think when the price action is flat, especially with declining volume, there can be neither accumulation nor distribution--selling and buying have to be in balance. Maybe the cessation of the previous massive distribution might seem like a relative accumulation now, when in reality it isn't. However, a long basing period, like the 30 days leading up to last Monday, usually ends up with a sharp move--whether up or down depends to a large extent on whether or not it is oversold or overbought at that point.
Technical analysis is intended to remove emotion from stock buy/sell decisions--when one uses his head rather than his heart in buying or selling stocks I guarantee you he will profit more. This is as true now as it was in the 50's and 60's--the huge difference now is use of desk-top computers that are as powerfull as the main-frames of 30-40 years ago. Back then pattern recognition was about all TA could offer--but today's software like Metastock for Windows or Windows on Wall Street make pattern recognition pretty obsolete--although I will admit that seeing a Double Top or Head and Shoulders on a stock I am going to short is sort of comforting, it doesn't enter into the decision-making process at all.
Regards,
Gary |
