Market positive, but vulnerable on minor cycle

McCurtain Call/Put Dollar Value Flow Line (CPFL)

CPFL, like MAAD, rallied to new highs last week to reflect the lingering positive sentiment of options players who can be a fickle crowd on occasion. CPFL has been a market leader for months after bettering its late April highs back on October 19. Before that upside break, CPFL stubbornly refused to move lower even as the market suffered price damage into the May Flash Crash. The major indexes were hit hard during that late April through early July time frame, but CPFL would have none of it to suggest that options players were remaining net positive on the market longer-term even though the major indexes were saying otherwise. Finally the broad market voted in favor of CPFL and also moved to new highs for the move.

So long as CPFL continues to lead and/or confirm market strength, we can only presume prices will move higher. When the point comes, however, that options players become less enthusiastic about the market and the indicator begins to fail on the upside, prudence will be dictated.

Click charts to enlarge

Conclusion

The stock market posted another series of gains last week with the major indexes all last trading toward their highs for the move that began in the spring of 2009 and for the New Year. While it is a virtual certainty that the short-term trend will be the first to give ground on the downside, at this point we can simply point out that the smallest cycle remains positive, but vulnerable to the extent it is “Overbought” while short-term Momentum has confirmed none of the upside move since early to mid-December.

At the same time, the larger Intermediate Cycle remains positive and “Overbought” as Momentum has also demonstrated the failure to confirm on the upside. In a word, time is running out on the smaller trends. Their termination will then determine how the most important Major Cycle then plays out.

MAAD data for past 30 Weeks* CPFL data for past 30 Weeks

Date

NYSE Adv

NYSE Dec

Date

OEX Call $Volume

OEX Put $Volume

6-25-10

5

15

6-25-10

91068

599114

7-2-10

4

16

7-2-10

1034509

771231

7-9-10

18

2

7-9-10

635690

110808

7-16-10

9

11

7-16-10

171633

445073

7-23-10

16

4

7-23-10

322870

174663

7-30-10

15

5

7-30-10

199970

217368

8-6-10

15

5

8-6-10

271701

115037

8-13-10

3

16

8-13-10

132060

409972

8-20-10

8

12

8-20-10

176830

488032

8-27-10

6

14

8-27-10

207995

222943

9-3-10

17

3

9-3-10

488323

102016

9-10-10

12

7

9-10-10

287697

82863

9-17-10

15

5

9-17-10

289703

112410

9-24-10

12

8

9-24-10

209124

100570

10-1-10

9

11

10-1-10

145020

121894

10-8-10

14

6

10-8-10

394156

98483

10-15-10

10

10

10-15-10

476975

115923

10-22-10

11

9

10-22-10

2575024

116468

10-29-10

10

10

10-29-10

376133

120924

11-5-10

13

7

11-5-10

547056

71345

11-12-10

5

15

11-12-10

203906

305387

11-19-10

7

13

11-19-10

241420

143672

11-26-10

5

15

11-26-10

116916

149196

12-3-10

16

4

12-3-10

701973

55878

12-10-10

15

5

12-10-10

395991

42814

12-17-10

9

11

12-17-10

441634

61008

12-24-10

17

3

12-24-10

177600

88159

12-31-10

16

4

12-31-10

154527

60647

1-7-11

16

4

1-7-11

458733

97512

1-14-11

12

7

1-14-11

327777

49317



*Note: All data is for week ending on Friday even though ending date may be a holiday.
Unchanged issues in MAAD calculations are not counted.

MAAD data for past 30 days** CPFL data for past 30 Days

Date

NYSE Adv

NYSE Dec

Date

OEX Call $Volume

OEX Put $Volume

12-3-10

17

3

12-3-10

115848

24527

12-6-10

8

11

12-6-10

40933

17375

12-7-10

8

12

12-7-10

80650

30593

12-8-10

13

7

12-8-10

50397

15116

12-9-10

15

5

12-9-10

108582

14892

12-10-10

13

7

12-10-10

72621

16651

12-13-10

9

11

12-13-10

283329

35410

12-14-10

6

14

12-14-10

40676

17570

12-15-10

8

12

12-15-10

96633

33646

12-16-10

11

9

12-16-10

40412

30436

12-17-10

10

9

12-17-10

91895

20598

12-20-10

15

3

12-20-10

98065

26159

12-21-10

18

2

12-21-10

19915

33054

12-22-10

13

6

12-22-10

17751

17000

12-23-10

3

16

12-23-10

52317

31245

12-24-10

Holiday

12-24-10

Holiday

12-27-10

14

6

12-27-10

13115

9815

12-28-10

11

9

12-28-10

53716

15811

12-29-10

10

9

12-29-10

37335

20386

12-30-10

10

10

12-30-10

75836

15710

12-31-10

15

5

12-31-10

26220

13820

1-3-11

16

4

1-3-11

134306

31093

1-4-11

12

7

1-4-11

140762

19483

1-5-11

16

3

1-5-11

78925

30698

1-6-11

7

13

1-6-11

97949

28157

1-7-11

10

10

1-7-11

48312

21874

1-10-11

9

11

1-10-11

29813

22327

1-11-11

8

12

1-11-11

21584

17753

1-12-11

17

3

1-12-11

147563

22003

1-13-11

6

14

1-13-11

54780

20758

1-14-11

15

5

1-14-11

39593

23222

**Note: Unchanged issues are not counted.

Robert McCurtain is a technical analyst, market timer and private investor based in New York City. If you would like to read more about how the CPFL is constructed, read a Futures article on the concept. This will take you to the MAAD article. Robert can be reached at traderbob@nyc.rr.com.

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