Stock market advances despite weak indicators

Weekly Review: MAAD, CPFL indicator analysis

McCurtain Most Actives Advance/Decline Line (MAAD)

Daily MAAD rallied to a new short-term high above its December 20 peak last Friday, but strength was by fractions and indicator has yet to overcome more important intermediate resistance made back on March 20, 2012. A case could be made that because the Daily MAAD Ratio is toward “Neutral” with the Weekly MAAD Ratio not yet fully “Overbought,” higher index prices could follow. That’s possible, and so long s all cycles remain positive we have no intention of suggesting a long-term market exit except to the extent that the higher prices go and the longer negative indicator divergences persist, the greater the risk of an end to the party.

Underscoring all of this is that while MAAD on both the Daily and Weekly cycles has participated with pricing on the upside since March 2009, following the MAAD highs of May 2011, MAAD has NOT rallied as much as it has declined during periods of market weakness and despite higher index pricing relative to those 2011 highs. That sort of negative long-term divergence is classic to the extent it always precedes market highs unless the divergence is eliminated by remarkable indicator improvement.

maad

maad

McCurtain Call/Put Dollar Value Flow Line (CPFL)

CPFL hit a new short-term high and its best levels since the November lows last week, but the indicator has yet to overcome intermediate-term resistance created back on September 24. That’s the repeat line we’ve used over the past several weeks. The Daily and Weekly CPFL Ratios were last moderately “Overbought” at 1.63 and 1.25, respectively.

CPFL could overcome first resistance at last September’s highs with only a bit more buying, but the major resistance high hit in February 2011 remains as a long-term obstacle just as it has in our other key indicators such as MAAD, CV, and Momentum.

cpfl

cpfl

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