Just for fun when I was looking at a weekly chart of the S&P I started counting distribution weeks to see if I could garner any new insights into how, if any, affect it may have on the markets. This week was typical August trading and I don’t have a whole lot new to report given the slow trading.
IBD defines a accumulation day as a close higher than the previous day with rising volume. A distribution day is a close below the previous day with rising volume. You don’t often hear people talk about distribution weeks so I started to count the acc/dis weeks to see if the could foretell that the markets would do in the home stretch of the year (Sept-Dec).
I just checked out the past 3 years for fun, here’s what I found assuming all my data is correct.
2008
4 Acc wks / 9 Dis wksthrough mid August. The result of the following trade 4 months was disastrous.
Analysis – 2-1 ratio spelled disaster for the markets
2009
9 Acc wks / 8 Dis wks through mid August. The result of the following trade 4 months was a slow grind higher.
Analysis – Slight bull advantage led to the markets closing out the year with solid gains
2010
5 Acc wks / 12 Dis wks through mid August.
Analysis – Another 2-1 advantage to the bears could bring another big wave down.
