Stock market rallies, approaches near-term overbought condition

Weekly Review: MAAD, CPFL indicator analysis

McCurtain Most Actives Advance/Decline Line (MAAD)

On the heels of weeks of near-term “Oversold” conditions, Daily MAAD shot higher last week as Daily MAAD Ratio stretched its upward limits toward “Overbought” (last at 1.71). But considering the fact that the indicator nipped its June 4 low on November 14 after confirming none of the S&P’s strength after March 20 and into those September highs, upside strength in indicator leaves us under whelmed.

Put another way, even if Daily MAAD is able to overcome near-term resistance put in place via its September 14 interim high, we think at this point the odds of the indicator rallying higher to overcome major resistance at that March 20 high are somewhere between slim and none. What would that failure mean? Simply that the breadth underpinnings of this market remain weak and that we suspect price action since the spring of 2011 will prove to be, as far as the history books are concerned, a series of failed rallies that ultimately morphed into a Major Cycle top.

maad, stock index

maad, weekly

McCurtain Call/Put Dollar Value Flow Line (CPFL)

CPFL stats were net positive last week with the Weekly CPFL Ratio positive by 3.99 to 1. The Daily CPFL Ratio remains “Oversold,” but that has been the case for the past six weeks. And, as we’ve seen over the past several sessions, “Oversold” readings can be eliminated very quickly.

On a larger cycle time frame, we continue to view performance in CPFL as lackluster since the indicator topped back on February 25, 2011. That’s quite a stretch of time since then, but considering the fact the S&P has only managed to gain a bit more than 10% since then on increasing market risk, we wonder if CPFL will prove to be prescient once again. In other words, we have never seen an instance where CPFL diverged negatively from the major indexes long-term when the market did not eventually get in line with the indicator.

cpfl, oex

weekly, oex, cpfl

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