Net New Highs is a simple indicator that packs a powerful punch. The formula used to calculate it is straightforward: subtract the number of new 52-week lows from the number of new 52-week highs. But where the subtlety and skill come in are in interpreting this statistic.
Furthermore, Net New Highs is a stepping stone to an even more powerful indicator, also covered in this episode: Cumulative Net New Highs. To get this, you simply keep a running tally of Net New Highs. This can then be expressed as a line overlay on a chart, which can be used in a variety of ways that can help you make or save money.
Sound interesting? Keep reading, and then watch...
In this episode, you'll learn:
- All about Net New Highs, Cumulative Net New Highs, and how you can use both with a moving average line for excellent prognostication.
- How Net New Highs and Cumulative Net New Highs are interpreted -- both the basic methodology and more complex readings.
- How to add Net New Highs, Cumulative Net New Highs, and their moving average to your charts on StockCharts.com: this is the most complex part of the episode. For such a simple indicator, it is surprisingly difficult to set it up.
This episode is light on the calculations so there are plenty of real-life examples. We don't just tell you about Net New Highs -- we show you!
With Net New Highs and its derivatives, you can gauge the bullishness or bearishness of entire indices. Add this tool to your arsenal today!