Published : 3 May 2023
A distribution day occurs when the volume is higher than it was the previous session and a market representative index (for instance, the Nifty 50) loses more than 0.2% of its value in a single day.
The distribution day count determines the degree of market weakness when the market is in a Confirmed Uptrend.
During a Confirmed Uptrend, an investor keeps track of each day that qualifies for a distribution. In a Confirmed Uptrend, a distribution day count of 2-3 is benign and typically normal. However, one should be ready to have their positions reduced when the count reaches 5–6.
A distribution day may indicate that institutions are selling their positions, but after 25 trading sessions, its significance wanes. The index is also deducted from the count after it rises 5% above a distribution day's close.