Friday, November 05, 2010

5 November 2010 Accumulation/Distribution


5 November 2010 Accumulation/Distribution

We called a rally here on September 15, 2010. We declared a rally had started on 9 September. Here is the post:

"Did I say Rally?

Ok I am going to go out on a limb here and officially call this shift in momentum a rally. From looking at the S & P 500 and we had some interesting market shifts from the end of August to the 3rd of September. Then people started believing the big bad curse of September. Then about the 9th, it was a momentumless shift, but a shift none the same, a rally. I am going to take a guess and say this will not be a mini rally but at least as long as the one we saw from February to May. This could get us through the holidays and depending upon the election well into Q 1 2011."

This is what I was watching to come up with that guess. First I look at a software program we have called Vector Vest. Unlike many of its customers we use it as a confirming opinion and not a predictive. Then, with a lot of help from the IBD group, Investors Business Daily suite of publications we watch the direction and volume of the major indices. (DOW, S & P 500, and Nasdaq).

Then as instructed by the good information at IBD I start looking for consistent patterns that inidcate whether the big money folk are buying and selling. Below is a chart of the S & P showing where we had 5 positive days in direction and volume which indicates institutional monies were entering the market.  (Shown right below where i wrote the word BUY. 

By the 15th I felt comfortable saying it looks like a rally had commenced and had actually begun on the 9th. I have since found out that IBD calls this trend every day in their "Big Picture of the Day" Column. We went back a looked at recent down turns, and both Vector Vest and IBD have been with in a day or two of calling market direction changes.

We continue to be in an upward trend, as seen on the chart above. This understanding of accumulation (Institutional monies buying) and distribution (Institutional monies selling), really helps to know when to buy when to watch and when to get out of dodge. If this article helped or if you have nay more questions about accumulation and distribution, let me know. You can get a thorough education on the subject by joining IBD and you will receive William J. O’Neils (Founder of IBD) book, The Successful Investor.

A Good Day Deserves a Good Pour

I mentioned we celebrated last night and in keeping with the survey results, we enjoyed a great bottle of wine last night and thought we’d tell you about it.. We went to Hanna’s and enjoyed a meal with some good friends. I brought along a bottle of 2006 Opus One. This if you are not familiar with it is a Bordeaux style cabernet blended wine. The 2006 is 77% Cabernet, 12% Merlot, 5% Cab Franc, 3% Petite Verdot, and 3% Malbec. Though I should have had it opened earlier in the evening, we decanted this beauty and it turned out great. It was a real deep purple ruby color. Our guest immediately said smooth, cherry and berry. It was thick and luscious. I got smoky meat and little dark chocolate and some of the typical cassis taste you would expect from a big Bordeaux. This was a very nice pour. You can still find a few of these in the 125-150 range. If you shop it, I have heard you can get it below $100.00. This has the makings of a $250-$400 in a few years as they get more rare and the economy recovers. Hope you enjoy.

Salve Lucrum


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