New Highs/Lows Ratio [NH/NLRatio]

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The New Highs/Lows Ratio function determines the strength of the market by calculating the ratio of new 52-week highs to 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 Ratio is calculated by dividing the number of new highs by the number of new lows. Usage ----------- The New Highs/Lows Ratio is similar to the Advance/Decline Ratio. Values above 1 are generated when more stocks are setting new highs than are setting new lows. Values below 1 are generated when more stocks are setting new lows. It differs from the New Highs-New Lows indicator in that the scale of values remains more consistent. This indicator makes a reasonable overbought/oversold indicator for the market. Extremely high values may indicate that the market is becoming overbought, meaning that a sell-off may occur in the near future causing prices to drop. Likewise, extremely low values can indicate that the market is becoming oversold. 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.