The markets this past week have continued in the trends as I identified them in my posts of May 31st and June 2nd.  So here, I’m updating my post of May 2nd; you should see that post and it precedents for definitions of the indicators I’m displaying on this chart.

This chart is a continuation of the chart I showed on May 2nd, the only difference being that, in the upper pane, it’s 33-day moving averages instead of 22-day.  This somewhat longer averaging period smooths out a lot of random volatility without significantly increasing the lag of these indicators.

We see that distribution really got underway last November, and has continued since then.  When distribution accompanies a rising market, that’s a leading indicator of a market reversal.  However, it gives us no indication of timing.  It simply told us that the “smart money” was distributing out of the stock as the uptrend went into its final stages.

The market has been in a clear, strong downtrend (short term, daily bars) since late April, and along with it, distribution has been increasing in intensity, meaning that it’s now in sync with the trend.

When this downtrend eventually gets to its later stages, a leading indicator of its end will be the appearance of accumulation (green above red, MVPT diverging upwards from price), or, at least, the disappearance of distribution.  But there’s no hint of that now, meaning we’re in the strongest part of the downtrned.  So, hold onto your hats and enjoy the ride down!

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