It is another "Averaging Scheme" - doesn't give us any information about PRICE Expectation. WORTHLESS.
Anybody really use this thing?
Well, at least one person does.
But I've been thinking about this, and maybe a better explanation between what the CMF does and what A/D line provides is needed here.
As Dex provided in the formula, the CMF is an indicator that assumes
that if prices of an individual price chart, whether it be that of a stock or a basket of related components, rises with increasing volume, it can only do so if there is a higher amounts of money moving into the issue than going out of it. Alternately, if prices close toward the lower end of the day's range, and volume increases, the opposite is true.
The important thing here to remember though is that any money moving in or out of a specific equity product can only do so based on how large (or deep) the liquidity pool is that's available to draw from where this same "money flow" branch of the larger pool can then move in to
or be withdrawn out of
this same individual product. So the only true way to absolutely know how much money there is for the stock market - the total liquidity that's available for investment
- is best reflected by the number of advancing issues compared with the number of declining issues on any given day and then plotting the cumulative results [breadth leads price (TA 101)].
So provided below is a partial longer term time chart of the NYAD line showing that current liquidity levels are at highs never ever seen since these statistics have been kept...and that would be 1926.
And until this data diverges with price, history suggests that prices will continue to trend higher no matter what you may "feel" to be different.