The New Highs New
Lows indicator (NH/NL) is the difference between the number
of stocks reaching new 52 week highs and the number of stocks reaching
new 52 week lows on a daily basis, often reaching an extreme low
just before a the market bottoms out. Used in a divergence fashion,
it can indicate both bullish or bearish signs because the market
as a whole may still be making new highs, but the number of stocks
contributing to this rise is actually falling. The NH/NL oscillates
around zero - if positive, the market is bullish, if negative, bearish.
Many traders trade as the New Highs New Lows indicator passes thru
the zero point, helpful when confirming a trend. Day trading techniques
involving this indicator are limited.
To calculate the New
Highs New Lows indicator, take the difference between the number
of stocks that made new 52 week highs and the number of stocks that
made new 52 week lows.