New Highs-Lows Cumulative [NH-NLCum]

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The New Highs-Lows Cumulative function determines the strength of the market by calculating the cumulative difference between new 52-week highs and new 52-week lows. Parameters ------------------ New Highs     The number of issues (securities) that closed on a 52-week high. New Lows      The number of issues (securities) that closed on a 52-week low. Note that while this function is intended for use with these specific values, any values can be used for these parameters, including preprocessed values or values for a subset of the market. Indicator Value ------------------------ The New Highs-Lows Cumulative Indicator is calculated by subtracting the number of new lows from the number of new highs and adding this to the previous value of the indicator. The value of this indicator at the beginning of the data series is considered to be zero. Since this is a cumulative indicator, the actual value is less relevant than the slope and direction of the line. Usage ----------- The New Highs-Lows Cumulative Indicator is similar to the Advance/Decline Line in that it is useful for determining the strength of the market. When more stocks are reaching new highs than new lows, the value increases. When more stocks are reaching new lows, the value decreases. This indicator can be compared to current price trends to determine if there is support for those trends. For example, when prices are increasing, but the New Highs-Lows Cumulative Indicator is decreasing, a decreasing number of stocks are participating in the higher prices. Therefore, the price trend may begin to reverse. Since it concentrates only on a portion of the activity in the broad market, it is typically more useful as a confirmation for other indicators than for generating entry/exit signals directly. In general, broad market indicators can be used for trading against broad market indices through options, futures, and mutual funds. They can also be used to increase the effectiveness of more specific signals by adding confirmation or warning of upcoming trends. Source ------------ This indicator is based on an entry in "Technical Analysis From A To Z" by Steven B. Achelis.