Divergence between CMF and A/D ?

Discussion in 'Technical Analysis' started by ksork, Nov 1, 2009.

  1. ksork



    I have this week started to look in to the accumulation / distribution indicators. But I found that CMF / TMF / OBV often give false signals (e.g. shows a divergence against price that NOT are followed by a shift in price). The only indicator that in my initial opinion work is the A/D-line, that doesn’t gives those false signals.

    For example, we have during the last couple of month a divergence between price and CMF / OBV for most leading stocks, but the A/D-line continue up (and by that confirms the up-trend). Only the future can tell if it is correct … But I have seen the same pattern before, and the conclusions I did was that the A/D – line more often was correct that OBV / TMF / CMF.

    What is your opinion in? Have I misunderstood CMF/OBV/TMF etc, or does them really provide a lot of false signals? For now, A/D-line is on the top of my list as the most reliable leading indicator for acc/dist.

    To my understanding, CMF / OBV is oscillator, can that be the reason why it is likely to have a false divergence between price and OBV / CMF in an upward trending market?

    Best Regards / K.Sork