Users: jfprieur: Are they selling GOOG and AAPL and buying FB?

We can use the Accumulator over longer term time frames to analyze the trading of individual securities.  During extended up or down trends, the Accumulator can be very useful in identifying the nature of trading at major highs and lows.  (Learn about the Accumulator and divergence patterns)

We have been watching with interest the Accumulator on FaceBook since it came public.  Typically, new issues rise after they come public, but then over the next several weeks to a month, stock held by the new issue syndicate sells out after the initial stabilization process concludes and prices decline.  If the fundamentals warrant it, during this decline, mutual funds and institutions begin building longer term positions.  This is a very common pattern that I have observed over 30+ years of managing portfolios.

This is the pattern that has been developing in FaceBook since it came public.  If you ignore all the hype and media hoopla and focus on the tape, this pattern is being clearly shown.  The chart below shows the FaceBook Accumulator since the stock came public on a 30 minute scale.  Heavy selling came in on May 25th which represents those interests that bailed on the stock.  

But from May 29th to June 1st, as the stock was making lows into early June, the Accumulator rose into those lows indicating buying.  The Accumulator dipped somewhat into the next low on the 4th, but the volume of selling was clearly not as strong indicated by the lesser downward slope of the Accumulator during this period.  Beginning on June 14th, the volume of buying spikes upward and this buying continues.

The Chart below shows the Apple Accumulator also on a 30 minute scale over the same time period.  The Accumulator follows the price pattern until June 18th when it shows a clear break of the pattern.  The Accumulator indicates an increase in selling pressure beginning on 6/18.

This pattern is also seen on Google a day later on the 19th.

Conclusion:  I believe we're seeing money coming out of both Apple and Google and moving into FaceBook.

The Accumulator is designed to be used in addition to your existing analytics.  It is not designed as a stand alone indicator.  For swing trading or building longer term positions in important companies, the Accumulator can provide a deeper level of understanding into how a stock is trading than simply watching price.  If the stock you are working with is coming into a support level, for example, and the Accumulator is showing selling down into that level, you may want to look at the next support level.  If the Accumulator is confirming your support, your trade should be taken.

More information, tutorials and additional Accumulator examples

The Accumulator is a Windows application which can also be run on a Mac using a windows emulator.  Monthly subscriptions are $277 including the datafeed to power the program. You can run as many Accumulator windows on as many different symbols as your computer can handle (20+) and of course they run in real time.  To request a subscription or for more information, email steve@hftalert.com.