Indicator definitions and links to articles on the CPFL and MAAD indicators.
McCurtain Call/Put Dollar Value Flow Line (CPFL): CPFL is a dollar-weighted, options-based, divergence indicator that is plotted against an underlying index or issue to determine the “internal” health of the referenced instrument on a daily or weekly basis. So long as the CPFL remains in synch with the issue, the extant trend, bullish or bearish, should continue. When a divergence develops to the extent the CPFL fails to “confirm” price action (for example: the market index makes a new high, but the CPFL does not), the longevity of the underlying trend in the index is in doubt. CPFL can be plotted against any financial instrument that reports call and put data.
McCurtain described the CPFL in the November 2008 issue of Futures: “Options redux: 25 years into the revolution.” The indicator can also be referenced in “The Encyclopedia of Technical Market Indicators,” Second Edition by Robert W. Colby, CMT. McGraw Hill. 2003.
McCurtain Most Actives Advance/Decline Line (MAAD): MAAD is an indicator that reflects the market bias of so-called “smart money” to the extent large investors are committing funds, or withdrawing them, as reflected in daily and weekly Most Actives, exchange-based statistics. So long as MAAD continues to move in tandem with the index it is plotted against (the S&P 500 Index for example), the extant market trend should remain intact. But if, for example, MAAD begins to falter as the index continues higher, it should be presumed that astute investors have begun to sell into strength.
McCurtain described the MAAD in the June 2009 issue of Futures: “As smart money goes, so goes the market.”
Robert McCurtain is a technical analyst, market timer and private investor based in New York City. He can be reached at firstname.lastname@example.org.