Replies to post #12254 on EnviroTechnologies International Inc. (ETII)

[punk153]

The Accumulation/Distribution graph shows the trend of a given time span (Close-Open) compared to the range of that time span (High-Low) multiplied by the significance of the time span (volume). The time span would be given in the chart as 15-minute, 1-hour, 1-day and so on. Significance (volume) would dictate how important the Trend vs. Range is at a given time span. It in essence multiplies this ratio to give it a smaller or higher net worth to the overall trend of the Acc/Dist graph.

A/D = {(Close – Open) / (High - Low)} x Volume

A/D= {(Trend)/(Range)} x Significance

Bearish example:
{(3 – 10) / (10 – 2)} x 1,000 = -875

If the total volume were 10,000 instead, then the significance or the downtrend in the actual graph would be multiplied by 10 and would result in -8750 towards the graph instead.

A low volume means that the end result of the A/D equation is less significant towards the A/D graph. Any person using technical analysis should understand the significance of volume in either an uptrend or a downtrend and how that volume can give a trend 'importance'.

Basically, this equation gives you the ability to see a trend on the overall bullishness or bearshness of a stock with the volume priced in.

Low volume doesn't give the A/D graph the ability to rise or fall as drastically and gives you a sense that the recent movement in the A/D isn’t significant.

On the other hand, if the A/D is heading higher, it gives you the ability to note (by the varying degree of movement) the significance that a trend in the pps has in relation to the A/D graph. A rising A/D graph with falling pps would in essence tell you that the stock has had minimal shares being exchanged between hands to cause the pps decline. It would also tell you that the stock is likely to trade very thinly to the beginning of the stocks A/D graph's past peak if a rally were to begin in the pps since there must have been significant volume as the stock price was rising (shown by the A/D graph's incline significance)

*This is hard to expain without chart examples. Hopefully my explanation clears up some of the confusion.

http://www.chart-formations.com/indicators/accumulation-distribution.aspx?cat=market-strength

IMO

[punk153]

There has been lots of accumulation on the way up as well as the way down in the pps. This means that is likely that the people accumulating won't sell many of their shares till a much higher pps. This selling will occur and other will start to accumulate the shares that are sold.

There has to be a buyer for every seller and the accumulation/distribution line shows the demand for those buys versus sells. A very sharp decrease in price with very little volume means that there wasn't a demand for the shares and the seller had to sell and a discounted rate. There will likely be a high volume of selling though and the significance of the drop will effect the Acc/Dist line because of it. Likewise, I huge increase in the pps with very little volume means that their is lots of demand, but very few shares. There will likely be a lot of volume once that sell point is reached for the longs and this will also carry over into the Acc/Dist graph.

The current Acc/Dist graph tells me that buyers continue to support the stock and they are waiting for further news. The pps will adjust to the Acc/Dist graph much like a spring that has been depressed once this buying demand is set off.

Your questions are always very sound and just Housh. It is very hard to find an answer to many of your questions. The last two posts to you are the best way I can explain the Acc/Dist line and its significance.

IMO