Market Health: Net New Highs vs. Lows - December 15, 2023
- Peter Schenk
- Dec 15, 2023
- 1 min read
Net New 52-Week Highs is a simple breadth indicator found by subtracting new lows from new highs. “New lows” is the number of stocks recording new 52-week lows. “New highs” is the number of stocks making new 52-week highs. This indicator provides an immediate score for internal strength or weakness in the market.
What we want to see happen is, perhaps obviously, more stocks hitting New Highs, than New Lows. In fact, a market that has fewer than Net 10% of stocks hitting new 52-week highs is not likely to maintain an uptrend.
This week saw the biggest expansion in market breadth since the 2021 up trend blowing through 20% Net New Highs for the large cap S&P500 as well as the Mid and Small Cap Indices.
Two things are true about extreme breadth readings like this. a) Short-term pullbacks are common b) In almost all instances the market is higher 6-12 months later.
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