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.