Daily MAAD perked to a new short-term high last Friday and to its best level since April 17, 2012. But despite ongoing strength that has propelled the S&P 500 within 4% of its all-time closing high (1565.15) made October 9, 2007, MAAD on both the Daily and Weekly Cycles continues to suggest that since the spring of 2011, the net buying tendencies of Smart Money have changed. While that group has participated in all of the rallies since March 2009, since May 2011 it has bought less on rallies than it has sold on declines.
Although its true Weekly MAAD popped slightly above resistance created in September last week, it remains below resistance highs made in March 2012 and the spring of 2011. There is also a long-term downtrend line stretching back to the mid-1999 MAAD peak that preceded the 2000 highs. Despite slight improvement in the indicator here and there, we continue to view the overall failure of MAAD to confirm index pricing for the better part of the past two years as an ominous sign on the long term.
McCurtain Call/Put Dollar Value Flow Line (CPFL)
Daily CPFL rallied above its September resistance high last Friday, but like its sister indicators including MAAD, Momentum, and CV, it is nowhere near overcoming major resistance created back in early 2011. In fact, the indicator would have to double yet again its gains over the past year to even equal the high made the week ending February 25, 2011.
While upward movement in CPFL since the November lows is short-term bullish, the fact that options players are only marginally more optimistic about the market’s longer-term prospects, makes us wonder just how long those prospects will last since the buyers of calls and puts on a Dollar Value basis have only been purchasing slightly more calls than puts for nearly two years.