Investors are probably fully aware of the idea of "accumulation" days and "distribution" days in order to gauge momentum and breadth in equity prices. When investors are strongly accumulating stock (i.e. when the number of issues higher on the day are at least 4x the number issues that are lower) than this is generally a bullish sign for the stock market. This is especially true when over a period of time, in the charts below we use three months, there are many days when this accumulation is happening. For example, we reached a high of 25 days out of 66 trading days on November 8th, 2011 when at least 4 stocks were higher for every 1 stock that was lower. This strength in breadth surpassed the levels reach coming off the lows in 2009. In contrast today we sit at only 5 days out of the past 66 trading days where accumulation has taken place. This slightly above the low reach on July 17, 2014 of 3 days but it signals that momentum has stalled somewhat especially compared to the 2011-2013 period.
What is also interesting is the lack of volatility in the markets is also effecting distribution days as well. Distribution days are the opposite of accumulation days (i.e. the number of issues lower is 4x the number of issues higher). We have only had 4 distribution days out of the past 66 trading days. This level has only been lower a handful of times over the past seven years.
Finally, we like to look at a net accumulation day indicator which simply takes our accumulation indicator and subtracts our distribution indicator. This net level currently stands at 1 day. Which in a vacuum doesn't look too bad.
What is noteworthy, however, is how this series has diverged from equity prices this year. Throughout this five year bull market our net accumulation indicator has moved in line with equity prices. This year, however, there has been a noticeable divergence as equity prices have increased and investors haven't participated as enthusiastically as they have in the past.
