Stock indexes threaten new highs but indicators do not

Weekly Review: MAAD & CPFL Analysis

McCurtain Most Actives Advance/Decline Line (MAAD)

Daily MAAD recovered a bit last week, but like the broad market was unable to better short-term highs put in place February 19. Strength since February 26 (1485.01—S&P 500) may ultimately be viewed as a small rebound into a developing Intermediate Cycle high. Daily MAAD’s failure to better intermediate resistance created nearly a year ago on March 20, 2012 and Weekly MAAD’s failure to better the 13-year-old downtrend stretching back to 1999, and just prior to the bull market highs of 2000, could compound the bullish dilemma.

Even if the market balance shifts in favor of buyers to the extent new highs are hit on both the Minor and Intermediate Cycles and in some instance on the Major Cycle, Weekly MAAD must first better its April 2011 resistance highs and then the long-term highs made in 2007. While the first obstacle could be surmounted we suspect the second will not be to suggest that while Smart Money confirmed some of the advance from March 2009, it has definitely not participated in this four-year-old bull market to the same extent it bought into previous advances. What that means is that new lows in MAAD could be made more easily and that could act as a drag on the broad market.

McCurtain Call/Put Dollar Value Flow Line (CPFL)

CPFL action was relatively uneventful last week. Daily CPFL continues to hold below a short-term high made on February 19. The indicator is marginally overheated on the short-term trend and “Overbought” on the weekly, or intermediate, trend. But most importantly, CPFL on neither the Daily nor the Weekly cycles is anywhere near overcoming major resistance made just over two years ago during the week of February 25, 2011. That variance suggests that even though options buyers have participated to some extent on the upside since late 2011 and have purchased more calls than puts on a Dollar Value basis, they have done so with far less enthusiasm than they bought calls off of the March 2009 lows.

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