Cumulative Volume Breadth (CVB) Buy Signal

By Lawrence G. McMillan

We have been talking about the possibility of this buy signal occurring, and now it has. That is, the running total of advancing volume minus declining volume, daily (in “stocks only” terms), has reached a new all-time high – exceeding that of December 2021. When CVB reaches a new all-time high, $SPX follows.

There is quite a bit of room between the current $SPX price and its all-time high at 4808, so this could be a strong buy signal. A couple of caveats, though: 1) not every system works every time, and 2) the last time we got one of these buy signals after a long hiatus was June 2020 ($SPX eventually advanced 198 points to a new all-time high), but right after the signal was confirmed, $SPX fell almost 200 points before reversing and eventually gaining the new high. The market was more volatile back then – still rather close to the pandemic-induced volatility – but even so, be aware that this is not necessarily a one-way signal for $SPX to immediately race to a new all-time high.

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