Pocket Pivots and Distribution Days as Volume Signals
Summary
This indicator uses volume and price behavior to highlight possible institutional buying or selling pressure. A pocket pivot is an up day whose volume exceeds the volume on recent down days; the display distinguishes five-day and ten-day comparisons. Distribution days are identified using elevated volume alongside a price decline and a weak close within the day’s range. A 50-day average volume line provides context, while arrows mark unusually dry volume relative to that average.
The author suggests watching clusters of distribution days, while noting that an uptrend can persist despite a high count. Distribution observations are removed after an index rises sufficiently from the signal or enough trading days pass. The document supplies indicator logic but no performance testing. It explicitly cautions that these marks are not buy signals and should be interpreted with trend, price action, market stage, and company fundamentals. Thresholds and the listed display descriptions should be checked against an implementation before use.
Key ideas
- A pocket pivot compares up-day volume with volume on recent down days.
- Distribution days combine heavier volume, a price decline, and a weak close within the daily range.
- Clusters of distribution signals may merit attention, but they do not guarantee a trend reversal.
- The display includes a 50-day volume average and markers for low volume.
- The indicator is contextual and does not provide standalone buy signals or performance evidence.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.