Let's Make Money!

[Rolls Royce Phantom]

Accumulation/Distribution Accumulation/distribution is a cumulative indicator that uses volume and price to assess whether a stock is being accumulated or distributed. The accumulation/distribution measure seeks to identify divergences between the stock price and volume flow. This provides insight into how strong a trend is. If the price is rising but the indicator is falling this indicates that buying or accumulation volume may not be enough to support the price rise and a price decline could be forthcoming.

Key Takeaways
1. The accumulation/distribution line gauges supply and demand by looking at where the price closed within the period's range, and then multiplying that by volume.
2. The A/D indicator is cumulative, meaning one period's value is added or subtracted from the last.
3. A rising A/D line helps confirm a rising price trend.
4. A falling A/D line helps confirm a price downtrend.
5. If the price is rising but A/D is falling, it signals underlying weakness and a potential decline in price.
6. If the price of an asset is falling but A/D is rising, it signals underlying strength and the price may start to rise.