Identify Market Participant Groups by Price & Indicator Patterns
The StockCharts.com indicator Accum/Dist was designed to help track the large lot versus small lot activity. Decades ago, when the concept of distinguishing between the large 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.
See the stock chart example below.
There were Mutual Funds but no Pension Funds in the Stock Market. In addition the number of Market Participant Groups was 5, not the 9 there are today in the Stock Market so interpretation of this indicator was simpler. Now each of the 9 Market Participant Groups have different order types, venues, order sizes, agendas, and a vast disparity of information available to them. 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 the Accum/Dist Indicator, you MUST use Relational Technical Analysis™ because it is more complete. This type of analysis combines Price via Candlestick Patterns, Trend and Trendline Patterns, as well as the indicators 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 the StockCharts.com Accum/Dist Indicator.
Price shows the magnitude of the daily Price action. For example, was Price contained and controlled via Time Weighted Average Price orders, or were High Frequency Traders creating huge candlestick Price action? Each group has its own candlestick amplitude that it creates, often deliberately based on the ORDER TYPE they prefer to use and the VENUE they typically use.
Martha Stokes CMT
TechniTrader technical analysis using a StockCharts chart, courtesy of StockCharts.com
Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses
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