Introduction - the volume and cash flow
There are many indicators for measuring the volume and cash flow for a certain market-based instruments. One of the most popular volume indicators in recent times is the line Accumulation / Distribution. Underlying assumption, built into the level of indicators, including the Line Accumulation / Distribution, is that volume precedes price. The volume reflects the number of lots traded market instruments and is a direct reflection of inflows and outflows in money market instruments. Often, before the market is moving the tool, there is an increase of the period immediately prior to the motion. Most indicators of volume and cash flow are designed to identify the early increase in positive or negative cash flow to price movements.
Methodology
Line Accumulation / Distribution was developed by Marc Chaikin to assess the cumulative cash flow in and out of the market instrument. To fully understand the methodology behind the lines Accumulation / Distribution, can be useful to explore one of the earliest indicators of volume and compare them.
In 1963. Joe Granville developed equilibrium volume indicator (OBV), which was one of the first and most popular indicators to measure positive and negative cash flow. Equilibrium volume is a relatively simple indicator that adds volume in the corresponding period, when the price rises at the close and deduct it when the price at the close of the decline. Cumulative number of positive and negative cash flow (the summation and subtraction) form a line of equilibrium volume. This line can then be compared to the price schedule marketing tool for finding the divergence or confirmation.
In developing the Lines Accumulation / Distribution, Chaikin used a different approach. Equilibrium volume change using the closing prices of one period with respect to the following to estimate the amount of positive or negative. Even if the market opens at the bottom of the tool and the top closed, the evaluation of equilibrium volume for the period would be negative if the closing was lower than the closing of the previous period. Chaikin ignores changes in one period relative to the next, and instead focuses on the price activity for the period (day, week, month). He received the formula for calculating the value based on the location of the closure on the band during the period. We'll call this value "Value locations closing" or CLV. CLV has a range of plus one to minus one with the center at nule.Suschestvuet five main combination:
1. If market instruments rose to a maximum, the absolute top of the range, the value will be equal to plus one.
2. If market-based instruments rose above the middle of the range maximum-minimum, but below the maximum, the value will lie between zero and unity.
3. If market-based instruments rose exactly midway between the maximum and minimum, the value is zero.
4. If the market closes below the middle of the tool range maximum-minimum, but above the minimum, the value will be negative.
5. If market instruments rose to a minimum, the absolute bottom of the range, the value is minus one.
CLV then multiplied by the amount in the corresponding period, and values form the Line Accumulation / Distribution
Daily schedule CIEN provides breakthrough Lines Accumulation / Distribution, and shows how different levels of closure influence the value. At the top of the submitted price schedule for CIEN. The level of closure on the range of maximum-minimum is visible. The following price schedule is black histogram is the value for the location of the closure (CLV). CLV is multiplied by the volume and the result is presented in the form of the green histogram. Finally, at the bottom we see a Line Accumulation / Distribution.
1. The closure is at a minimum and the CLV = -1. Volume, however, was relatively small, and the Meaning of Accumulation / Distribution for the period was moderately negative.
2. The closure is very close to the maximum and the CLV = + .9273. The volume is relatively high, and a total value Accumulation / Distribution is high.
3. The closure is located close to the minimum and the CLV = - .75. Volume was moderately high, and the resulting value Accumulation / Distribution is also moderately high.
4. The closure is located approximately between the middle of the range maximum-minimum and maximum, and the CLV = + .51. The volume is very high, and the Meaning of Accumulation / Distribution is also very high.
Alerts Lines Savings / Distribution
Alerts Lines Savings / distributions are quite direct and to the concept of divergence and confirmation.
Bychi signals
Bullish signal when the line Savings / distribution forms a positive divergence. Beware of weak positive divergence, which are not in a position to make higher maximums, with rebound or those that are relatively short. The main issue is to determine the primary trend lines Accumulation / Distribution. The two-week positive divergence may be somewhat suspicious. However, several positive divergence deserves serious attention.
The graph line AA Savings / distribution formed a huge positive divergence of more than 4 months. Even though the share has fallen from levels above 35 to below 30, Line Stores / Distribution relentlessly continued to rise. It seemed even that the two graphics do not belong to the same period of time. However, the action finally caught up with Line Accumulation / Distribution, in November, when broken resistance.
Another way to use lines Accumulation / Distribution is to reaffirm the strength and consistency improve. When wealthy Growth, Savings Line / distribution should be maintained at a high level, or at least move in the upward trend. If the market moves up the tool quickly and Line Stores / Distribution is a problem with the achievement of higher highs, or is in a sideways trend, it should serve as a warning that the pressure of buyers is relatively weak.
WMT began in August, a sharp increase, which was accompanied by the same heavy traffic lines Accumulation / Distribution. In fact, Line Savings / distribution was stronger at the beginning of September, than action. After a short consolidation, and the action and the indicator started to rise again and recorded new maximum correction in early October. Cash flow was accompanied by an increase from the outset and continued throughout. The action has finished moving from 40 to 60 after about 3 months. Interestingly, from this moment (December 1999). Liniya Accumulation / Distribution beginning to move in a lateral range and indicates that the pressure of customers begins to decline.
Bear signals
The same principles that apply to a positive divergence, applied to the negative divergence. The key issue is to identify the main trend lines Accumulation / distribution and compare it with the appropriate market-based instruments. Short-term negative divergence and those that are relatively flat, should be viewed with healthy skepticism.
WMT graph shows the relatively flat negative divergence, which is still little more than a month. This negative divergence should still make the lower minimum and continue, perhaps a little more time to mature. The relative weakness of lines Savings / distribution should be a sign that the pressure of shopping is reduced, while market-based instruments to be at high levels.
DAL graph shows a negative divergence, which was developed in the framework of the apparent downward trend. The action clearly broke down, and Line Savings / distribution decreased in accordance with the movement of shares. Reduce Lines Savings / distribution confirmed the weakness of the action. During the correction of June-July, the event showed a new maximum correction, but the Line Savings / distribution has not confirmed it, forming thus a negative divergence.
Conclusion
Line Accumulation / Distribution is a good tool for measuring the amount of force behind the movement of market-based instruments.
1. As an indicator of volume, Line Savings / distribution will help determine whether the increases in market-based instruments, with its increase or decrease.
2. Line Accumulation / distribution may be used to measure the overall cash flow. Rising trend indicates that the predominant pressure buyers and descending trend indicates that the predominant pressure sellers.
3. Line Accumulation / distribution can be used to determine the divergence of both positive and negative.
4. Line Accumulation / distribution can be used to demonstrate the strength and consistency of movement of the market instrument.
Nevertheless, there are some drawbacks Line Accumulation / Distribution:
1. The indicator does not take into account GEPy. Market-based instruments, which makes the GEO and rose up the middle between the maximum and the minimum will not receive any "advance" on the increase in the GEPa. Several GEPov can be largely observed.
2. Since Line Accumulation / Distribution is clearly tied to the price movement, especially in the closure, it sometimes will move in conjunction with market-based instruments and lead to a rare divergence.
3. Sometimes it is difficult to detect small changes in the cash flow. The degree of change in the trend may slow down, and it may be difficult to detect until the Line Savings / distribution does not spread upwards. These deficiencies have been corrected in the cash flow Chaikin (indicator is described in a previous issues of the journal).
The use of graphics programs
Line Accumulation / distribution can be installed as an indicator of above or below the price chart. Since this indicator is a synthesis based on each individual period (day, week or month), there are no facilities for changing its settings. By default, together with the indicator, including 20-periodnaya Exponential Moving Average (EMA). In general, the indicator is enhanced when there is above 20 EMA periodnoy and weakened - as below.
There are many indicators for measuring the volume and cash flow for a certain market-based instruments. One of the most popular volume indicators in recent times is the line Accumulation / Distribution. Underlying assumption, built into the level of indicators, including the Line Accumulation / Distribution, is that volume precedes price. The volume reflects the number of lots traded market instruments and is a direct reflection of inflows and outflows in money market instruments. Often, before the market is moving the tool, there is an increase of the period immediately prior to the motion. Most indicators of volume and cash flow are designed to identify the early increase in positive or negative cash flow to price movements.
Methodology
Line Accumulation / Distribution was developed by Marc Chaikin to assess the cumulative cash flow in and out of the market instrument. To fully understand the methodology behind the lines Accumulation / Distribution, can be useful to explore one of the earliest indicators of volume and compare them.
In 1963. Joe Granville developed equilibrium volume indicator (OBV), which was one of the first and most popular indicators to measure positive and negative cash flow. Equilibrium volume is a relatively simple indicator that adds volume in the corresponding period, when the price rises at the close and deduct it when the price at the close of the decline. Cumulative number of positive and negative cash flow (the summation and subtraction) form a line of equilibrium volume. This line can then be compared to the price schedule marketing tool for finding the divergence or confirmation.
In developing the Lines Accumulation / Distribution, Chaikin used a different approach. Equilibrium volume change using the closing prices of one period with respect to the following to estimate the amount of positive or negative. Even if the market opens at the bottom of the tool and the top closed, the evaluation of equilibrium volume for the period would be negative if the closing was lower than the closing of the previous period. Chaikin ignores changes in one period relative to the next, and instead focuses on the price activity for the period (day, week, month). He received the formula for calculating the value based on the location of the closure on the band during the period. We'll call this value "Value locations closing" or CLV. CLV has a range of plus one to minus one with the center at nule.Suschestvuet five main combination:
1. If market instruments rose to a maximum, the absolute top of the range, the value will be equal to plus one.2. If market-based instruments rose above the middle of the range maximum-minimum, but below the maximum, the value will lie between zero and unity.
3. If market-based instruments rose exactly midway between the maximum and minimum, the value is zero.
4. If the market closes below the middle of the tool range maximum-minimum, but above the minimum, the value will be negative.
5. If market instruments rose to a minimum, the absolute bottom of the range, the value is minus one.
CLV then multiplied by the amount in the corresponding period, and values form the Line Accumulation / Distribution
Daily schedule CIEN provides breakthrough Lines Accumulation / Distribution, and shows how different levels of closure influence the value. At the top of the submitted price schedule for CIEN. The level of closure on the range of maximum-minimum is visible. The following price schedule is black histogram is the value for the location of the closure (CLV). CLV is multiplied by the volume and the result is presented in the form of the green histogram. Finally, at the bottom we see a Line Accumulation / Distribution.1. The closure is at a minimum and the CLV = -1. Volume, however, was relatively small, and the Meaning of Accumulation / Distribution for the period was moderately negative.
2. The closure is very close to the maximum and the CLV = + .9273. The volume is relatively high, and a total value Accumulation / Distribution is high.
3. The closure is located close to the minimum and the CLV = - .75. Volume was moderately high, and the resulting value Accumulation / Distribution is also moderately high.
4. The closure is located approximately between the middle of the range maximum-minimum and maximum, and the CLV = + .51. The volume is very high, and the Meaning of Accumulation / Distribution is also very high.
Alerts Lines Savings / Distribution
Alerts Lines Savings / distributions are quite direct and to the concept of divergence and confirmation.
Bychi signals
Bullish signal when the line Savings / distribution forms a positive divergence. Beware of weak positive divergence, which are not in a position to make higher maximums, with rebound or those that are relatively short. The main issue is to determine the primary trend lines Accumulation / Distribution. The two-week positive divergence may be somewhat suspicious. However, several positive divergence deserves serious attention.
The graph line AA Savings / distribution formed a huge positive divergence of more than 4 months. Even though the share has fallen from levels above 35 to below 30, Line Stores / Distribution relentlessly continued to rise. It seemed even that the two graphics do not belong to the same period of time. However, the action finally caught up with Line Accumulation / Distribution, in November, when broken resistance.Another way to use lines Accumulation / Distribution is to reaffirm the strength and consistency improve. When wealthy Growth, Savings Line / distribution should be maintained at a high level, or at least move in the upward trend. If the market moves up the tool quickly and Line Stores / Distribution is a problem with the achievement of higher highs, or is in a sideways trend, it should serve as a warning that the pressure of buyers is relatively weak.
WMT began in August, a sharp increase, which was accompanied by the same heavy traffic lines Accumulation / Distribution. In fact, Line Savings / distribution was stronger at the beginning of September, than action. After a short consolidation, and the action and the indicator started to rise again and recorded new maximum correction in early October. Cash flow was accompanied by an increase from the outset and continued throughout. The action has finished moving from 40 to 60 after about 3 months. Interestingly, from this moment (December 1999). Liniya Accumulation / Distribution beginning to move in a lateral range and indicates that the pressure of customers begins to decline.Bear signals
The same principles that apply to a positive divergence, applied to the negative divergence. The key issue is to identify the main trend lines Accumulation / distribution and compare it with the appropriate market-based instruments. Short-term negative divergence and those that are relatively flat, should be viewed with healthy skepticism.
WMT graph shows the relatively flat negative divergence, which is still little more than a month. This negative divergence should still make the lower minimum and continue, perhaps a little more time to mature. The relative weakness of lines Savings / distribution should be a sign that the pressure of shopping is reduced, while market-based instruments to be at high levels.
DAL graph shows a negative divergence, which was developed in the framework of the apparent downward trend. The action clearly broke down, and Line Savings / distribution decreased in accordance with the movement of shares. Reduce Lines Savings / distribution confirmed the weakness of the action. During the correction of June-July, the event showed a new maximum correction, but the Line Savings / distribution has not confirmed it, forming thus a negative divergence.Conclusion
Line Accumulation / Distribution is a good tool for measuring the amount of force behind the movement of market-based instruments.
1. As an indicator of volume, Line Savings / distribution will help determine whether the increases in market-based instruments, with its increase or decrease.
2. Line Accumulation / distribution may be used to measure the overall cash flow. Rising trend indicates that the predominant pressure buyers and descending trend indicates that the predominant pressure sellers.
3. Line Accumulation / distribution can be used to determine the divergence of both positive and negative.
4. Line Accumulation / distribution can be used to demonstrate the strength and consistency of movement of the market instrument.
Nevertheless, there are some drawbacks Line Accumulation / Distribution:
1. The indicator does not take into account GEPy. Market-based instruments, which makes the GEO and rose up the middle between the maximum and the minimum will not receive any "advance" on the increase in the GEPa. Several GEPov can be largely observed.
2. Since Line Accumulation / Distribution is clearly tied to the price movement, especially in the closure, it sometimes will move in conjunction with market-based instruments and lead to a rare divergence.
3. Sometimes it is difficult to detect small changes in the cash flow. The degree of change in the trend may slow down, and it may be difficult to detect until the Line Savings / distribution does not spread upwards. These deficiencies have been corrected in the cash flow Chaikin (indicator is described in a previous issues of the journal).
The use of graphics programs
Line Accumulation / distribution can be installed as an indicator of above or below the price chart. Since this indicator is a synthesis based on each individual period (day, week or month), there are no facilities for changing its settings. By default, together with the indicator, including 20-periodnaya Exponential Moving Average (EMA). In general, the indicator is enhanced when there is above 20 EMA periodnoy and weakened - as below.
stockcharts.com
No comments:
Post a Comment