Stock market volatility fades, cumulative volume lags price

Weekly Review: MAAD & CPFL Analysis

Next notice how those same CV lines have performed since the March 2009 bear market lows. They have both moved higher with index pricing, but both are still struggling to reclaim even 50% of their losses since the 2007 highs. And that’s despite the fact the Dow has made a new all-time closing high and the S&P is poised to follow suit. We should also add that CV in the NASDAQ Composite and the S&P Emini relative to the 2007 highs and the ensuing bear market are almost identical to CV patterns in the Dow and the S&P (No volume stats are available for the Value Line index, so we cannot compute CV on VAY).

Will CV in the S&P 500 and those other key indexes improve enough in the weeks and months just ahead to overcome those massive negative divergences? Wanna make any bets on that one?

Daily S & P 500 with Cumulative Volume (CV)

Weekly S & P 500 with Cumulative Volume (CV)

Daily S & P 500 Emini Futures contract with Cumulative Volume (CV)

Weekly S & P 500 Emini Futures contract with Cumulative Volume (CV)

After a little more than four years of higher prices, many believe this bull market still has a long way to go. All cycles remain positive, so what’s to worry? What’s important to remember is that the lines of supply for this market are way overextended. VERY. And while its true indicators like the Advance/Decline Line continue to make new highs, is it reasonable to assume that a ½ point advance in XYZ on 2 million shares is equal to a ½ point rally in BAC on 749 million shares? Flip the relationship, and a ¼ point drop in XYZ cancels a ¼ point gain in BAC. Seems there could be just a small weighting problem with the traditional a-d line. That’s why we like our Most Actives Advance/Decline Line (MAAD) which, although it reached its best levels March 11 since March 2009 on the Daily series, it has still only recovered 50% of its losses since the fall of 2007. That 50% retracement number just happens to coincide with CV 50% retracement levels for the same time span.

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