Identify Market Participant Groups by Price & Indicator Patterns
The StockCharts.com indicator Accum/Dist was designed to help track the large lot activity versus the small lot activity. Decades ago, when the concept of distinguishing between the large lots versus small lots started being discussed by the Sell-Side Institutions, the Stock Market was an entirely different Market Structure. Almost all orders then were filled on the exchanges via Market Makers.
There were Mutual Funds in the market but no Pension Funds and the number of Market Participant Groups was 5 and not the 9 there is today, so the interpretation of this indicator was simpler. Now each 9 distinctly different Market Participant Groups have different order types, venues, order sizes, agendas, and vast disparities of knowledge and information. By the time the retail crowd gets the news, it is old news to just about every other Market Participant Group.
When analyzing a stock using Accum/Dist, you MUST use Relational Technical Analysis™ because it is more complete. This type of analysis combines Price via Candlestick Patterns, Trend and Trendline Patterns, Volume and Accum/Dist.
If you want to use accumulation indicators, you need to approach their use properly for the current Stock Market of today. The footprint of each different Market Participant Group is in the combination of these on the chart and can be found in Price, Volume, and StockCharts.com Accumulation/Distribution Indicator. See the stock chart example below:
Martha Stokes CMT
TechniTrader technical analysis using StockCharts charts, courtesy of StockCharts.com
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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