These terms were first coined (described) by the great stock analyst W.D. Gann.

Chapter XX of his book Truth of the stock tape gives some of his analysis of these patterns in charts. He talks more about it on page 85;
"The length of time, as well as the total number of points that a stock has moved up or down from high or low levels, must be considered in judging whether accumulation or distribution is taking place."
and page 65
" When a stock or group of stocks on Averages remains for a long time in a narrow range and the volume of sales is small, it is a sign that either distribution or accumulation has run its course and the market is getting ready to turn. After short weeks, months, or years, watch which way the market turns and go with it."

The Dow showed plainly it was going sideways from May of 2000. By this time a higher top then lower bottom was in place, followed by lower top then higher bottom - sideways. (Note I believe prior to Feb 2000 you would have called the trend up.) Once sideways, the question then becomes, is it accumulation of shares (for another move up) or distribution of shares, for a plateau then fall. Here is where knowledge of the business cycle is handy - I have put up a substantial amount on this subject now in the cycles section of the website.

The Dow was plainly "distributing" in my view (as we told you last year) and the business cycle could easily be read at 12 to 1 o'clock during this time. A downturn being next. Easily forecastable for those that can resist the herd. Note once again how knowledge of Gann is helpful - the 4th time a market approach lows, it almost always will go through them -as the Dow has done in March. Those lows will now turn into tops this year - i.e. tops become bottoms; another pattern commented upon first by Gann. His books are essential reading, but like everything else, should not be read in isolation to other indicators.