Trade Stock Online The stocks which are late movers and start their advance after the general market is about top are rushed up fast and make what is known as a sharp top. They do not remain long at top levels, but decline quickly, because the general market has already turned downward, and, of course, the late mover, which is going against the trend, must naturally meet with greater selling pressure at high levels than the stock which is already down considerably from the top. Then the question might be asked, "Where does distribu tion take place in stocks that make sharp tops?" They are distributed as they run up and are also sold on the way down. After making a sharp top, they usually break back 10, 20 or 30 points and then halt. At this level most people think they are down too much to sell short and have reacted enough to be good purchases; therefore they buy them. In a case of this kind, distribution often takes place 20 or 30 points below the top in the late movers, while the stocks which lead the advance are distributed within 5 to 10 points of the top. The leaders make the same level many times, some stocks as much as 10 or 15 times, while the late mover is more of a volcanic eruption. It shoots up to the top and never makes the same high price the second time, because when the ex plosive buying power is over, it recedes quickly to a level that might be termed semi-normal. It is a quick recession from high temperature. TIME REQUIRED FOR DISTRIBUTION The time required to distribute stocks depends upon the stock, the amount of shares outstanding, general conditions and how well the stock is known or advertised among the public. For instance: In a market like 1919, when trading aver aged two million shares per day for over sixty days, it would be easier to distribute a million shares of stock in sixty days when the public were all wild and madly bullish, buying everything in sight, than it would be to distribute them in one year's time in a normal market. When stocks reach a level where distribution is taking place, they make rapid moves up and down. There is a large volume of trading and both short selling and buying is taking place. People are attracted to the stock that makes fast moves up or down, because there are great opportunities for making money. People once convinced about a thing remain convinced for a long time. For example: A stock moves from 120 to 150 seven or eight different times — that is, every time it comes down around 120 it rushes up again to 140 and 150. The public finally become convinced that every time it gets down around 120 it is a sure buy for quick profits. Now, eventually, after the stock has been thoroughly distributed, it declines to 120 and fails to rally. Everybody is long of it, holding on and hoping. It goes down 10, 30, 40, or 50 points, until investors and traders become disgusted, scared and sell out. Some of the surest signs of distribution are fast moves up and down on large volume, increased dividends, stock dividends and special privileges to stockholders, which really is the bait that catches the sucker and in the end causes a big loss. stock trading advice ~ unclaimed money |