Accumulation / Distribution Index
 |
 |
 |
 |
Accumulation/Distribution index is a technical analysis indicator with a cumulative total volume, adding or subtracting each day's volume in proportion to where the close is between the day's high and low.
First a close location value is formed,
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, ie.
The starting point for the acc/dist total, ie. 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. Vice versa for 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 close-to-close up or down which the latter uses.
Ricky Schmidt
February 27, 2007
|