Distribution Days In Stock Indexes Come In Different Shapes And Sizes

Distribution days are like wine. A glass or two is fine. It’s social, it’s probably good for your digestive system. But one too many will send you reeling. Because distribution days almost always are signs that institutions are exiting the market. And, as the big funds control the bulk of daily volume, and hence the overall market’s direction, you can’t expect stocks to rise without those big guns on your side.

Key Takeaways:

• Big downside moves in explosive volume are the clearest sign of distribution, a sign that mutual funds, hedge funds, banks and insurance companies are unloading shares.
• But there are nuances to them, and it’s important to differentiate mild distribution from heavy distribution.
• While monitoring distribution in the market is important, it’s also important to monitor the action of leading growth stocks.

“Big downside moves in explosive volume are the clearest sign of distribution, a sign that mutual funds, hedge funds, banks and insurance companies are unloading shares.”

http://www.investors.com/how-to-invest/investors-corner/distribution-days-in-stock-indexes-come-in-different-shapes-and-sizes/