Filtered Distribution
Companion chart to Homework #22 and Lesson #6 in "Extracting Market Behavior" series
Companion chart to Homework #22 and Lesson #6 in "Extracting Market Behavior" series
In this video, Homework #22 and Lesson #6 in "Extracting Market Behavior" series, we explore how to filter distributions to help identify sequential relationships in data. Specifically, we look at the day session change, and evaluate the effect of the overnight change on the day session change. For instance, if we had a very positive overnight session, what did the distribution of the day session change look like? What was the median, the mean, the mode, etc. If we had a very negative overnight session, how did that effect the day session change?
Accumulation/Distribution is a momentum indicator which takes into account changes in price and volume together. The idea is that a change in price coupled with an increase in volume may help to confirm market momentum in the direction of the price move.
Note the similarity of this formula to that of the stochastic; this is basically a stochastic multiplied by volume. This means that if the security closes near its high, the volume multiplier will have a greater effect than if the security closes nearer to its low.