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!
CEO, Wealthpire Inc.
P.S. In our next episode, we’ll be looking at Record High Percent; a breadth indicator based on the High-Low Index we covered a few weeks ago. See you next week!