New Highs-New Lows [NH-NL]

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The New Highs-New Lows function determines the strength of the market by calculating the 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-New Lows (NH-NL) Indicator is calculated by subtracting the number of new lows from the number of new highs. This indicator is typically smoothed with a moving average to filter out day-to-day fluctuations and display longer term trends. Usage ----------- The New Highs-Lows Cumulative (NH-NL) indicator is similar to the Advancing-Declining Issues indicator in that it is useful for determining the strength of the market. A value above zero is generated when more stocks are setting new highs than setting new lows. A value below zero is generated when more stocks are setting new lows. 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.