KEWLTECH: Issue 002 – Accumulation

AccumulationStockCharts.com Definition

The act of buying more shares of a security without causing the price to increase significantly. After a decline, a stock may start to base and trade sideways for an extended period. While this base builds, well-informed traders and investors may seek to establish or increase existing long positions. In that case, the stock is said to have come under accumulation.

I’m as plain Jane as can be.  Boring old MACD.  Boring old Stochastic.  No fancy indicator sets that can compare to Star Trek Level 3 Diagnostic in the engineering room.  Well don’t include the original Star Trek of the 60’s.  Las Vegas flashing lights is all they could do back then.   Hello!   But I digress.

When the market wants to pop up the price.  It accumulates.
Doesn’t matter if it will be a big move or a weee little one point move.  It will accumulate.

Mr. StockCharts.com says “… After a decline, a stock may start to base and trade sideways …”.

When do you usually see accumulation?
After a decline.

What will you see?
You should see the candles start to base and trade sideways.

Very basic display of Accumulation.  And exactly as Mr. StockCharts.com defined it.

But Mr. Kewltech sir.   The definition also states and I quote.  “The act of buying more shares of a security without causing the price to increase significantly. ”  How does that happen?  How pray tell do you build up bullish tones without causing the price to increase significantly?   How do you buy shares and not affect the price?

Why does one accumulate?  The act of accumulating suggest that you were from a state of deficiency.  “After a decline, a stock may start to…”  In order to orchestrate a significant rise in price from your current state.  You must amass … “The act of buying more shares of a security…”

Logic states that since there was a “decline”, that there must have been a massive influx of sellers.  In order to offset the voluminous bear attack, the initial phase of the bulls come back is to accumulate and nullify the bears advantage.   This act will not affect the price significantly because most of the bullish volume will be absorbed to offset the bearish volume.

An accumulation is useless if it does not result in an uprising.  As soon as the bulls offset the bearish volume.  They finally overcome the bears and drive the price back up.

ACCU-CHING!!! LOL and I was told the funnymentalist tagged this stock “over valued”. Funnymentals go out the door compared to techs.

Now knowing this.  Could you attribute the security to move up in price without you knowing it?  It must be the news right (barring some unforeseen catastrophic event)?  You funny mentalist!

How can you tell this act of accumulation is working?

Its in the chart.