Short-Term Distribution Within Long-Term Accumulation Until Trend Signature Changes

Distribution and accumulation are difficult to judge within any trend. The force within and behind a trend is relative and cumulative. For example, the distribution as described by Richard Russell can look ominous, but it must be framed against not only against the short- but also long-term trend. What seems like a lot of distribution days over the short term could be comparable to a spectator of a knife fight obsessing harsh language.

What investors should be asking, does the short-term “distribution clusters” alter the energy signature behind the trend? REV(E), a measure of trend energy, answers this question. REV(E) reveals that the recent spate of distribution clusters have not altered the accumulation signature within the trend. In other words, as long as REV(E) leads and positively diverges with price, it suggests a continuation of the nominal bull market that started in 2009.

NYSE Composite Average and Trend Energy

From Richard Russell's Dow Theory Letters,

Stock Market -- Older subscribers may remember "Distribution days/". These are the days when the market declines on higher volume than the preceding day. Distribution days are usually described as days where the big money and institutional money is selling.

Distribution days are calculated in series of ten trading sessions. For the record, over the last two weeks we have had six distribution days on the NYSE, 5 for the S&P 500, and 3 for the NASDAQ. (Russell comment -- That's a lot of distribution days).