DISTRIBUTION PHASE IN STOCK MARKET
The distribution phase in the stock market refers to a period when institutional investors and other large market participants begin selling their holdings of a particular stock or asset. This phase typically occurs near the end of an uptrend or bull market.
Key characteristics of the distribution phase include:
High trading volume: As large investors sell their positions, trading volume often increases.
Price consolidation: Prices may move sideways or experience smaller upward movements as selling pressure meets buying demand.
Weakening upward momentum: The asset's price may struggle to make new highs.
Increased volatility: Price swings may become more pronounced as buyers and sellers compete.
Divergence in technical indicators: Some technical indicators may show weakening trends while prices are still high.
The distribution phase is often followed by a downtrend or bear market as supply begins to outweigh demand. It's important to note that identifying this phase in real-time can be challenging, and it's often easier to recognize in hindsight.
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