The Big Boys are Distributing Stock

Some quotes from Tom Williams (http://www.tradeguider.com/mtm_251058.pdf):

1. However, you do need to recognise that professional traders can do a number of things to better their trading positions: Gapping up or gapping down, shake-outs, testing, and up-thrusts are all moneymaking manoeuvres helping the market-makers to trade successfully, at your expense – it matters not to them, as they do not even know you.
2. Frequently, you will find that there are days where the market gaps up on weakness. This gapping up is far different from a wide spread up, where the market-makers are marking the prices up against buying. The gapping up is done rapidly, usually very early in the day's trading, and will certainly have emotional
impact. This price action is usually designed to try to suck you into a potentially weak market and into a poor trade, catching stop-losses on the short side, and generally panicking traders to do the wrong thing. You will find that weak gap-ups are always into regions of new highs, when news is good and the bull market looks as though it will last forever...Trend lines represent potential resistance to a move in one direction or the other. Try to remember that it takes effort by the specialist or market-makers to penetrate resistance. The market always wants to take the path of least resistance.
3. If you observe that the volume is low as the market moves up, you know this has to be a false picture. This low volume is caused by the professional money refusing to participate in the up-move, usually because they know the market is weak. The market may be moving up, but it does not have the participation of the traders that matter. Unless the ‘smart money’ is interested in the move, it is certainly not going to rise very far...When these traders are not interested in any up-move, you will see
low volume, which is known as ‘no demand‘.
4. Up-thrusts can be recognised as a wide spread up during the day (or during any timeframe), accompanied by high volume, to then close on the low. Up-thrusts are usually seen after a rise in the market, where the market has now become overbought and there is weakness in the background. Up-thrusts are frequently seen after a period of selling, just before a down-move. Note the day must close on or very near the lows; the volume can be either low (no demand) or high (supply overcoming the demand).
5...the distribution phase. It may be accompanied by a buying climax as described above or a slower rounding over of the prices, taking on the characteristic shape of a mushroom top over a longer period of time. This slower selling has frequent up-thrusts on high volumeand the price will whipsaw up and down as they support the price to create a small up-move to sell on.
Volume on the up-moves can be either high or low:
• High volume shows that selling has swamped any demand and tends to appear at the beginning of anydistribution phase.
• Low volume shows that no demand is present, and tends to appear at the end of a distribution phase.
6. If the market is already in a rally and high volume suddenly appears during an up-day (or bar) and immediately the market starts to move sideways or even falls next day, then this is a key indicator of a potential end to the rally.
7. A bear market takes place, not because there is necessarily more selling than buying, but because there is insufficient buying (support) from the major players to stop the down-move. Selling has already taken place during the distribution phase at a higher price level and until you see buying coming into the market, the market will remain bearish. There is little or no support in a bear market (buying), so prices fall. Herein lies the reason why markets fall much faster than they rise.
8. You cannot go straight into a bull market from a bear market unless there has been a substantial transfer of stock from weak holders to strong holders. You need to see this transfer in the underlying stocks that make up the Index. If this transfer is not clear at any potential lows, and an up-move starts anyway, you will know well in advance that the move is not a full-blooded bull move; instead, a price rise is liable to fail. In any move that is liable to fail, you will see either a ‘no demand up-day’ (low volume) or an excessively high volume up-day, with no results (prices come off the next day, or an up-thrust appears). You will not see this type of action in a true bull market.