If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Friday, May 25, 2012

New 52 week highs and lows

Lets take a look at a chart of new highs.  Here is the link to the site
I usually change the graph to dots when I get there.  Last year they started doing strange things with the bars.

I used to only look at the raw numbers and not in chart form.  Through that analysis I noticed 100 being an important threshold.  When the market is coming out of a correction, the majority of days the new highs should be above 100.  When I started looking at this chart I noticed the 50 day MA seems pretty useful.  Notice how it turned down in March and April last year ahead of the market down turn.  It also turned up nicely in Nov. and Dec. before the market started its rocket move up.  It can diverge from price at times, and just because it is sloped down it does not mean the market is going to tank.  If price starts to confirm the downward slope then a correction is likely.  However, generally speaking, when it is sloped up the market rises fairly consistently.  It can turn up very sharply out of a correction as an early warning that conditions are improving.  When it drops below 100 like it did last fall it usually takes some time for the market to recover and mount a rally again.  We have not done that yet, but it will soon unless new highs pick up significantly .

Here is the chart for new lows. Link is

The first important threshold for new lows is 200.  Most minor corrections get very few if any days above 200.  Once you start getting above that for numerous days, you know it is getting more serious.  Once the market starts to rally, I want to see the new lows drop below 100 most days.  Last week we crossed above the 100 threshold for several days, but not 200 yet.  The lows for most stocks are at much lower levels from last fall. That probably makes this a bit useless in this situation, at least until after Oct. of this year.  I think the current pullback has caused more technical damage then is apparent in this data.


No comments:


The information in this blog is provided for educational purposes only and is not to be construed as investment advice.