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Accumulation/Distribution Line
ADX (Wilder's DMI)
Average True Range (ATR)
Chaikin Money Flow (CMF)
Chaikin Oscillator
Commodity Channel Index (CCI)
Comparative Relative Strength
MACD
MACD Histogram
Momentum
On Balance Volume (OBV)
Price Oscillator (PPO)
Rate of Change (ROC)
Relative Strength Index (RSI)
Stochastic Oscillator
Volume
Volume Oscillator (PVO)
Williams %R

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Accumulation/Distribution Line

The Accumulation/Distribution Line is a cumulative momentum indicator that uses price and volume to determine whether money is flowing into or out of a stock. It is similar to On Balance Volume (OBV) but instead of adding or subtracting the day's volume if the stock is up or down, the Accumulation/Distribution Line adds or subtracts a percent of the day's volume based on where the stock closed in relation to it high and low.

If a stock closes very close to the high of day then most of the volume is added to the cumulative total. If a stock closes near its low, most of the volume is subtracted. This implies that if a stock consistently closes near its high on solid volume while having an occasional down day on weak volume, the Accumulation/Distribution Line will trend up with occasional small pullbacks.

Like many indicators, the Accumulation/Distribution Line ought to move in the direction of the underlying issue, and a divergence is a hint that reversal may be near.




This DAL chart shows an example of a negative divergence the occurred between the stock and its Accumulation/Distribution Line. The stock was bouncing and made two higher highs, but the indicator was trending down. That means volume on up days tended to be lighter than volume on down days and many more days the stock closed near its intraday low rather that near its intraday high. DAL eventually succumbed and fell.



AA shows a positive divergence. While the stock was trending down, its Accumulation/Distribution Line was in a steady uptrend indicating some internal strength was building. The stock then broke out in mid November and enjoyed a nice rally.


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