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Saturday, May 16, 2009

Major Distribution Day and the Magic Number Three

While I’m updating my chart book, I found this chart: 7.1.3 Major Accumulation/Distribution Days. I have an interesting thought about this chart and like to share with you. It’s purely speculation, so just for fun only.


My theory about Major Distribution Day (I know lots of people call it 90% down day) is that a Major Distribution Day never comes along, so once the first one happens, there’ll be at least another one, unless a Major Accumulation Day kicks in, then the Major Distribution Day has to be recounted.

My theory about magic number three is, well, I found interestingly, the 3rd time usually is different.

Now look at the chart, we had 2 previous Major Distribution Day, both cancelled by a Major Accumulation Day thereafter. Now this is the 3rd time we have a Major Distribution Day, so my question is: Will the 3rd time be different?


  1. Cobra,

    And 3 is a Fib#, though there's quite a Fib crowd at 1, 2, 3, & 5.

    A graphic observation: since the green accumulation bars are on a scale of 0 to 40, while the red distribution bars are on a scale of 0 to 80, the accumulation significance is exaggerated. If this is something you can change w/ the chart vendor's interface, normalizing the two scales would help interpretation.

    That's just a suggestion -- more importantly, your work continues to add appreciated insight.


  2. It's all relative on what is considered "major" though.

    The last one might be stretching it?


    Slow bleed out downward?

    I don't know the ezact percentage, heck you might though cobra. lol

    When option expo week is down, the next week has a higher probability of being follow-through (down as well).

  3. aka_ces, thanks for the suggesion but I cannot change the scale as there's no interface allowing me to do that. :-(

    Erik, I've changed the chart a little, any ratio > 9 is considered as major or 90% up/down day. This is widely agreed.

    There's a statistics about 90% up day here: I doubt if this kind of statistics are still valid nowadays though since we've seen too many 90% up days.

    Thanks for the follow-through theory. Let's wait and see.



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