Does the New High, New Low Ratio still work?
Of course it does but just keep in mind that it’s a longer term indicator rather than a short term buy and sell signal. I make today’s post due to what I am seeing with the NH-NL differential as it is starting to tread near positive territory for the first time in many months. The key for a sustainable bull market will be a push to a new 52-week high for this indicator.
“Chart provided courtesy of “DecisionPoint.com”
For a history of NH-NL posts, please see this category.
How about the foreshadowing provided in the post I made on August 21, 2007? Talk about calling a top!
According to Carl’s data, we must go back to 1998 to find a lower reading than last week’s NH-NL ratio. Even more amazing is the fact that we must then go back 20 to 38 years to find readings in the same vicinity as 1998 and 2007.
Ignoring the spike in 1987, we must visit the 1970’s to find readings below the -400 level on the chart.
When you pointed out the NH-NL Diffential reached a low of -400 in your post on August 21, 2007, I thought that by using the indicator, you should be calling a bottom rather than a top or does the -400 reading meant a top?
Just discovered your amazing blog! Do you offer any classes, training, etc. apart from the blog.
Hi Chris,
Each week i look at the IBD 100 list and make a selection of the best charts. I like to buy them when they had a little run-up and make some easy landings on the 20 or 50 MA to place stops more safely. I don’t like the canslim entry method. I think the most important letter in CANSLIM is M. I’m not a daytrader, but more a longer term holder. How do you yourself take the market condition into consideration? Thanks a lot!
Chris,
I agree that it’s a great longer-term indicator. Great call back in August!
Stuart,
I once had a premium subscription based service but it was a bit more than I could handle so I closed shop a couple years back and decided to keep to a simple blog. It allows me to spend more time with my family.
Tim,
Extreme readings do usually call a bottom or top as in oversold or overbought. Stocks such as PTR and CROX were showing signs of a climax run in the fall of 2007 so the reading went against a typical signal. As always, it’s a secondary indicator. Watch price and volume first!
Michel,
Market condition is huge! I haven’t made very many trades over the past several months. It’s been very quiet on this end.