Accumulation/Distribution let’s you know who is buying and who is selling. If you look at the price history of a stock it will be something similar to this:
| Ticker: XYZ | Open | Close | Change | Volume |
| Day 1 | 10 | 12 | +2.00 | 100,000 |
| Day 2 | 12 | 10 | -2 | 10,000 |
| Day 3 | 10 | 12 | +2.00 | 100,000 |
| Day 4 | 12 | 8 | -4 | 10,000 |
| Day 5 | 8 | 10 | +2.00 | 100,000 |
This stock starts the week at $10.00 a share and ends the week at $10.00 a share.
The stock gains $2 on Day 1 and looses the same $2 on Day 2.
Then at Day 3 gains back the $2.
On Day 4 the stock has a horrible day and looses 40% of its value.
On Day 5 it is right back where it started at the beginning of the week.
Is this stock a buy, hold, or sell?
This stock is under Accumulation and watch the money flow. Take the price change and multiply by the volume. Then sum the week:
| Ticker: XYZ | Open | Close | Change | Volume | Dollar Change |
|---|---|---|---|---|---|
| Day 1 | 10.00 | 12.00 | +2.00 | 100,000 | +200,000 |
| Day 2 | 12.00 | 10.00 | -2.00 | 10,000 | -20,000 |
| Day 3 | 10.00 | 12.00 | +2.00 | 100,000 | +200,000 |
| Day 4 | 12.00 | 8.00 | -4.00 | 10,000 | -40,000 |
| Day 5 | 8.00 | 10.00 | +2.00 | 100,000 Total |
+200,000 +540,000 |
Even though the stock traded flat for the week a lot more money flowed into the stock. On the down days no one sold their share even on the worst day.
Average Volume is a good benchmark when quickly reviewing if the day was accumulation or distribution.
Take TSEM. This has gone from 20.29 to 21.45 in the past week +1.16 or 5.7% for the week. Notice on Wednesday it had broken through the $21 on heavy volume. Then on Thursday the stock lost .09, but the volume was a third of the previous great up day? Even though the day closed down, who was selling?
| Close | Points | Volume | Low | High | Avg Vol | ||
| 2017-01-23 | Monday | 20.29 | -0.07 | 764,574 | 19.97 | 20.33 | 717,184 |
| 2017-01-24 | Tuesday | 20.81 | 0.52 | 933,036 | 20.36 | 20.85 | 723,381 |
| 2017-01-25 | Wednesday | 21.44 | 0.63 | 1,211,804 | 20.97 | 21.48 | 723,319 |
| 2017-01-26 | Thursday | 21.35 | -0.09 | 412,470 | 21.11 | 21.43 | 736,205 |
| 2017-01-27 | Friday | 21.45 | 0.1 | 392,397 | 21.29 | 21.5 | 736,205 |
This was a chart from bigcharts.com on Thursday and Friday gained back that loss and also on low volume. At this time it is at an indecision point. Buyers and Sellers are evenly split on low volume. The next week can go either way, but in the absence of buying the price will drop.