Time Frame: Intermediate
Category: Momentum

Description

The number of stocks reaching a new 52-week high relative to the number of stocks falling to a new 52-week low is a measure of the market's breadth. In a healthy market an increasing number of stocks will make a new high as the market climbs. In the late stages of a bull market the advance "narrows", meaning fewer issues reach new highs along with the major indexes. Similarly, the end of a bear market is evident when the number of new lows decreases even as the market declines.

Calculation & Significant Levels

New High/New Low Ratio: The daily number of new highs divided by the sum of new highs and new lows. The indicator is the 10-day moving average of this ratio. There are different degrees of warning levels:
* Bullish is above 70%
* Warning is dropping below 70%
* Bearish is below 20%
* Positive is rising above 30%.

Formula:                       	   (New Highs)
         A 10-day average of   --------------------
                              (New Highs + New Lows)

Gauge Elements: Magnitude, Slope
Updated: Daily

Strategy