Here is what we will need to see in the data to confirm a change in market trend has commenced:
- More new lows than new highs
- New low daily readings registering triple digit figures, consistently
- The NH-NL differential must turn negative
- The 10-d and 30-d average differentials must go negative (this is essentially the first sure sign that the market is changing direction – especially the 30-d diff.).
- Differential readings start registering figures larger than -300, -400, -500+.
March 2013 NH-NL Readings for NYSE:
- NYSE New Highs: The number of stocks making New Highs on a specific date
- NYSE New Lows: The number of stocks making New Lows on a specific date
- New High –New Low Differential: This is simply the number of stocks making new highs minus the number of stocks making new lows.
- NH-NL 10d Diff: This is a simple 10-day moving average representing the number of stocks making new highs minus the number of stocks making new lows.
- NH-NL 30d Diff: This is a simple 30-day moving average representing the number of stocks making new highs minus the number of stocks making new lows.
- NH-NL % Ratio: To calculate the percentage correctly, use this formula: (New Highs – New Lows) / (New Highs + New Lows) * 100 = X%
- NH-NL % Ratio 10d Ave: This is a simple 10-day moving average representing the percentages listed in the column terms #6 in this list
- It can take many months for the top to form. In 2007 it took 10 months. the 30wk MA and 40wk MA were broken and the market could not recover them.
