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Biotech / Medical : Biotech & Pharma.T.A,

BIB 85.73

-2.8%

Jan 23 4:00 PM EST

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To: Mike McFarland who wrote (659)	1/20/2005 4:03:38 PM
From: Jibacoa	of 3722

How a person can tell if shares are being accummulated? Mike: There are several "indicators" that are supposed to do that. One is the Accumulation Distribution Line, which is a momentum indicator that relates price changes with volume. One of the premises behind volume indicators is that volume precedes price.The volume or "Money Flow" indicators aim to find early increases in positive or negative volume to try to get an edge before the price move. The Acumulation Distribution Line was first described by Marc Chaikin and tries to determine the flow of money (or increaded volume.<g>)into or out of a security. Back in the 60s. Joe Granville described the On Balance Volume or OBV which was one of the earliest indicators to try to measure positive or negative money (or volume<g>)flow. OBV uses the change in closing price from one period to the next to determine if the volume (or money flow <g>) was positive or negative.When a stock opens at its intraday L and closes at is H the OBV will be negative if the C was lower than the previous C. ADL on the other hand measures the change in price for a given period, like day or week and doesn't take into account the change in price from one period to the next. Chaikin derived a formula to calculate a value based on the location of C relative to the intraday H & L. Value= (C-L)-(H-C) divided by (H-L). He then multiplied Value by the period's volume.<g> The "signals" of the ADL are based on divergence and confirmation. For instance during a period of "consolidation", the ADL may show a "positive divergence" sometimes for weeks prior to an upside break-out. On the other hand in an Uptrend the ADL may be helpful in "confirming" that the trend is still sustainable if it continues to show positive action. (If the ADL goes sideways it is a warning that the trend is getting weaker.<g>) The RSI or "Relative Strength Index" (introduced by J.Welles Wilder) compares the magnitud of a stock gains to its losses for a given period (Wilder recommended using 14 periods)and is given by an absolute number from 0 to 100 Other ways of looking at "Accumulation" (or "Volume Changes" <g>) are "Time Segmented Volume", "Money Stream", "Balance of Power" etc. I don't know if all that has been of any help.If you are interested, there are several books on TA or you can ask for a free trial subscription to The Trader's Magazine:"Technical Analysis of Stocks and Commodities" where you can read about all the traders & mathematicians trying to find the perfect indicator or the "holy grail" formula that eluded the early alchemists .<g> As Ray pointed out, here is a link to a chart of GLGC showing A/D: stockcharts.com[w,a]dacayiay[dc][pb50!h.02,.20!f][vc60][iut!Uf!Uc20]&pref=G RAGL Bernard

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