The New Highs/New Lows indicator (NHNL) displays the daily difference
between the number of stocks reaching new 52-week highs and the number of
stocks reaching new 52-week lows.
You can interpret this indicator as a divergence indicator or as an oscillator.
Divergence: The NHNL generally reaches its extreme lows slightly before a major market bottom. As the market then turns up from the major bottom, the indicator jumps up rapidly. During this period, many new stocks are making new highs because it's easy to make a new high when prices have been depressed for a
long time. As the cycle matures, a divergence often occurs as fewer and fewer stocks are making new highs (the indicator falls), yet the market indices continue to reach new highs. This is a classic bearish divergence that indicates that the current upward trend is weak and may reverse.
Oscillator: The NHNL oscillates around zero. If the indicator is positive, the bulls are in control. If it is negative, the bears are in control. You can trade the indicator by buying and selling as the indicator passes through zero.
Calculation:
NewHighs = The number of stocks reaching new 52-week highs
NewLows = The number of stocks reaching new 52-week lows
Inputs:
Group = XU100
Indicates the portfolio, group or index.
Indicator Type: Market Breadth