Winter may have a trick or two left, but it's going to be 50 degrees plus over the next two days in the Boston area and that makes winter much easier to deal with.
Distribution is the Better Part of Valor
Note: I sold KFN (-2%) and BCR (+2%) today for changes in my trading account.
Distribution days are one of those market observations than can have hard, set rules but you also need to allow for a little wiggle room. Investopedia tells us that distribution is:
"When trading volume is higher than that of the previous day without any price appreciation."
On any given day every stock that is bought is sold and vice versa. Price is used to gauge the desire of one side or the other to move a security. Aggressive buyers will push bids up and prices follow. Sellers looking for an exit will take less and less just to off load the position. Volume tells us how many are in the active mode for a stock.
I was thinking about distribution today as it relates to a stock I missed buying, and one I currently hold. Joe Fahmy offered on Twitter that the Nasdaq had it's second day of distribution selling since January 1st today. Here is a chart of the QQQ which shows the two days very clearly and follow the defined rules (click any chart for larger view):
The stock I had in mind was a name I was pissed I missed a break out on a few days ago but it was an earnings deal so that's how it goes. This stock will not show the classical distribution rules in play, but tell me this is not an unwind of shares steady and strong over the course of days. SMG:
Looking over my open 3 positions (AREX, BANR, WTS) I am most concerned that WTS is at a critical junction in the distribution debate. Take a look:
When you start to see signs of distribution, remember that discretion is the better part of valor. (I played with that line for the title, obviously)
Have a good night.