The accumulation/distribution line/accumulation/distribution index in the: stock market, is: a technical analysis indicator intendedāāto relate price. And volume, "which supposedly acts as a leading indicator of price movements." It provides a measure of theāācommitment of bulls and bearsāāto the market and "is used to detect divergences between volume and price action - signs that a trend is weakening."
Formulaā»
This ranges from -1 when the "close is the low of the day," to +1 when it's the high. For instance if the close is 3/4 the way up the range then CLV is +0.5. The accumulation/distribution index adds up volume multiplied by, "the CLV factor," i.e.
The starting point for the acc/dist total, i.e. the zero point, is arbitrary, only the shape of the resulting indicator is used, not the actual level of the total.
The name accumulation/distribution comes from the idea that during accumulation buyers are in control and the price will be, bid up through the day. Or will make a recovery if sold down, in either case more often finishing near the day's high than the low. The opposite applies during distribution.
The accumulation/distribution index is similar to on balance volume, but acc/dist is based on the close within the day's range, instead of the close-to-close up or down that the latter uses.
Chaikin oscillatorā»
A Chaikin oscillator is formed by subtracting 10-day exponential moving average from a 3-day exponential moving average of the accumulation/distribution index. Being an indicator of an indicator, it can give various sell. Or buy signals, depending on the context and other indicators.
Similar indicatorsā»
Other Price Ć Volume indicators:
See alsoā»
- Dimensional analysis - explains why volume and price are multiplied (not divided) in such indicators
- Glossary of stock market terms
- Modeling and analysis of financial markets
Referencesā»
- ^ "Accumulation Distribution". Incredible Charts.