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AzorAhai06
May 17, 2018 3:05 AM

Dow Jones Industrial Average Case for Wyckoffian Distribution 

Dow Jones Industrial Average IndexDJ

Description

The Dow Jones is beginning to make a strong case for entering a phase of distribution. As the DJ:DJI is essentially an index of the American Economy, this will be a trading range that I am particularly interested in and will continue to watch over the coming months.

It's difficult to time moves when it comes to Technical Analysis. Targets/Levels are easy to do, but the question of "when" is often hard to answer. This will be a waiting game. I shall also take a look at some key stocks on the Dow 30 to see if there's a consistent pattern of slowing bullish momentum, supply sneaking into the market, or the beginning of distribution phases.

Dow 30: https://www.investopedia.com/terms/d/dow-30.asp

Wyckoff Logic Tutorial: http://stockcharts.com/school/doku.php?id=chart_school%3Amarket_analysis%3Athe_wyckoff_method
Comments
dscrockett
Don't know about you, but the more I study this chart the more I believe the CO's are absorbing (accumulating shares) not distributing shares. I'm somewhat befuddled because volume to date does not confirm. What are your thoughts?
dscrockett
You might try adding the Darvas Box indicator which does help to define the trading range. Also, try adding the Chaikin Money Flow indicator (21-day) to define points of demand and supply. Configure the latter using bars instead of the default, line chart. I am tracking the potential distribution of the DJI using the same, keep us posted. Thanks, Greg
AzorAhai06
@skoutas, This is very useful. Thank you! Curious, I'm not used to the CMF Indicator, how are you using it to identify points of supply & demand? When CMFI reaches above a certain threshold, is that an area of supply? and the converse for demand?
dscrockett
@AzorAhai06, Use bars with the indicator. Above 0 equals demand, below 0 equals supply. Reference "The Wyckoff Method: A Tutorial on StockCharts.com for how Wyckoff used supply and demand to determine turning points. Of course, CMF post dates Wyckoff who died in 1934. Happy trading.
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