Found your column of August 18th most interesting. What indicators do you look at to conclude, "accumulation in the market started turning to churning and then to distribution"? (August 22, 2001)

  Thanks for the interest in the weekend column. It was meant to get people thinking and it appears it did. As far as the indicators regarding accumulation, churning, and then distribution, we don't have to look any further than the market itself. After the May high, the indexes started to drift lower, but the entire time, the price and volume action remained healthy, i.e., the up days were on stronger volume while the down days were on weaker volume. That shows that there were net more buyers than sellers in the market. It shows (watching block trades as well) that institutions were slowly accumulating positions in stocks across the board. The advance/decline line was also holding up well. That continued up to the latter part of July when we started to see the indexes unable to move to higher highs after some good price/volume action. On August 2, the Nasdaq showed a doji on strong volume at the most recent July high and started down again. That is a sign of some churning. Then it sold on lighter volume, and that was okay, but not great. Then it started to sell on rising volume, i.e., distributing. That started August 7 and intensified as the month wore on. The result was a breakdown on stronger volume, i.e., instead of accumulating shares the institutions started lightening up on equities. That corresponded to the big slide down in the dollar.


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