Tuesday, May 4, 2010

Equities: Anybody Else Watching the Distribution? ($SPX; SPY)

At it's simplest, distribution is defined as rising volume on down days.*
Here's the chart (excluding today) that I was contemplating this morning, from Singer$Markets:
(click to enlarge)

*On the other hand I've quoted a genius more than once:

"I can distribute more stock on upticks than I can on down"
-E.H. Harriman, railroad man and Wall Street pro.

*I used the Harriman quote in "Global Warming and Venture Capital" which references a Boston Fed paper on the Panic of 1907 and includes some Climateer rambling:
...It's not that often you see a sub-head like:
"In Which the Downfall of a Prominent Speculator Rocks the Financial System, and a Prominent Millionaire Saves the Day" in a Fed. Bank Publication.

Rereading this got me thinking about the differance between J.P. Morgan (Our Hero), and the current crop of VC's flogging their new-found green credentials. Where were they six years ago? Oh, that's right: Webvan and Pets.com and Boo.com and Askme.com. Even Queer Company blew through $5 mil.

Compare that to Morgan six years prior to the Panic, during the Northern Pacific squeeze of ought-one. J.J. Hill flying across the country in a commandeered train, counting on one of the few guys on the planet who knew as much about railroads and financial markets as Hill himself (or for that matter as much as Hill's nemesis Ed Harriman- E.H., famous for saying "I can distribute more stock on upticks than I can on down"); some things never go out of style....