December 20, 2011

Nasdaq New Highs - New Lows

In looking over many of the blogs & financial sites I review this week I couldn't help notice two sites mentioning the Nasdaq New Highs - New Lows Index ($NAHL) from Stockcharts.com. First, TimelySetup showed the cumulative plot of the $NAHL with a 15 day EMA and states:
"The following chart shows cumulative sum of the difference between new 52 week high and new 52 week lows of Nasdaq stocks. This chart is essentially none other than my Primary Breadth Trend analysis. It detects medium term trend in the stock market."
Next, we have The Patient Fisherman, discussing the same New High/New Low index but with a 10 day EMA. The Fisherman stated:
"By following this indicator you can move into the market as stocks begin their next move up. Catching stocks as they move out of a correction offers the lowest risk to highest reward entry point.  ...For the working person this is an easy to use indicator allowing you to move into the market during the bull phases and get you out before significant corrections."
In a sense this is similar to the all NYSE ($NYHL) discussed by Chris Perruna that I update each week in the "What Others are Saying" section, but I've been posting the All US New High - New Low Index for a broader view of the market.


Below, I've added pictures of all three Indices ($NAHL, $NYHL, $USHL) as cumulative plots with their 10 day EMAs.  I'll be adding these to the "What Others are Saying" section and removing the current area plot of the ($USHL), because I think the cumulative plots are much easier to read. It's interesting to note that the $NAHL gives a bit better/quicker signals (i.e. more definitive June sell signal)  than the other two broader indices and seems to be a better medium term indicator versus the SP-500. You may want to experiment with these plots by looking over a longer period of time.


Click to Enlarge Plots
Nasdaq New High - New Low for December 20, 2011
NYSE New High - New Low for December 20, 2011
All US New High - New Low for December 20, 2011
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1 comment:

  1. Hello, I just want to highlight that NAHL is relatively good to identify medium term trend. However, it is not very good for market timing purpose. Its main weakness is the fact that it almost always give up huge gain on the bearish side, partly due to sharp rally on the start of bull market.

    The following link briefly described its performance as trend following market timing tool. I initially used 20 day MA. But modified to 15 day MA because it seems smoother and faster.

    http://timelysetup.wordpress.com/market-analysis/primary-market-breadth-guide/

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