High-Low Percent Indicator Dips to a Reversal Zone


High-Low Percent for the S&P 1500 dipped into negative territory in late January. This is potentially significant because prior dips did not extend past the -2% level and marked turning points in the S&P 1500. The chart below shows the S&P 1500 High-Low Line ($SUPHLP) in the main window and High-Low Percent in the bottom window. High-Low Percent equals new highs less new lows divided by total issues. The High-Low Line is a cumulative measure of High-Low Percent. First, notice that the High-Low Line has been above its 10-day EMA (rising) since November 2012. This is an extraordinarily long time and indicative of a strong uptrend. The last flattening occurred in late August.

Click this image for a live chart

Turning to High-Low Percent, notice how this indicator dipped into negative territory in late June, mid-late August and mid December. The indicator almost dipped into negative territory in early October, but not quite. Subsequent dips and moves back above +2% provided opportunities to partake in the long-term uptrend. In other words, a dip to the zero line signaled a correction within the uptrend. Another bullish signal triggered this week as High-Low Percent dipped into negative territory and then moved back above 2% on Thursday. Before getting too bullish, notice that there was a double dip in August as the market produced one more leg lower during the August correction. This is not a stand-alone signal and should be used in conjunction with other aspect of technical analysis, such a chart patterns and momentum indicators. Note that StockCharts calculates and provides breadth data for over a dozen indices and sector SPDRs.

Good trading, good weekend and great football!
--Arthur Hill CMT

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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