The trending phase after distribution when prices fall steadily, driven by institutional selling.
Deep Dive
Mark Down is the declining phase following distribution where price falls steadily. During this phase, smart money has already distributed their positions (sold during the range) and price declines as remaining supply overwhelms diminishing demand.
Characteristics of mark down include: lower highs and lower lows, breakdowns from distribution ranges that hold, rallies on low volume (no demand), and re-distribution ranges within the decline. The mark down phase is where shorts profit and longs suffer.
The mark down phase continues until accumulation begins. Signs that mark down is ending include: volume surging at lows without proportional price drops (stopping volume), demand entering on declines, and price failing to make new lows. When mark down ends, accumulation begins the cycle anew.
Why It Matters
Identifying mark down phases helps traders stay with profitable short positions.
Related Terms
- Accumulation — A phase where institutional investors gradually buy an asset before a significant price increase
- Distribution — A phase where institutional investors gradually sell an asset before a significant price decline
- Mark Up — The trending phase after accumulation when prices rise steadily, driven by institutional demand.