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New Highs and New Lows Indicators

With key US indexes recording new all-time highs we thought it would be interesting to review the new highs versus new lows technical indicator. As the name implies, the new highs and new lows indicator compares stocks that are setting new 52-week highs versus stocks hitting new 52-week lows. It is another breadth indicator that gauges the strength or weakness of a market index based on stocks reaching their respective new highs and new lows.


When a market index records new all-time highs, its cumulative 52-week new highs minus 52-week new lows trend line should also expand and preferably breakout. Negative divergence between the price chart and the breadth indicator can warn of an impending price reversal in the market in question.


Enclosed below we will review 4 major US market indexes including S&P 500 Index (SPX), Dow Jones Industrial Average (INDU), NASDAQ Composite Index (COMPQ), and NYSE Composite Index (NYA).


As you can see from the charts, the highs minus lows technical indicators have been favorable this year. However, some of these breadth indicators still need to confirm technical breakouts to sustain their next major price rallies.


Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

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