The NYSE High-Low Index is a short term indicator calculated by dividing the number of stocks making new 52-week highs by the stocks achieving new highs and new lows. The daily NYSE HILO reading is based upon a 10-day moving average of the aforementioned calculation, which smooths out the movement over time. It doesn’t speak often, but when it does we have found it to be meaningful.
The last 5 times the NYSEHILO has reversed to a column of X’s from below 30% are shown below (and the change in the S&P 500 90 days later):
Source: Yahoo! Finance. Price return only, not inclusive of dividends.
A more in depth study of the NYSE High-Low Index can be found here (Harold Parker’s 1996 paper published in the MTA Journal).
It is worth noting that this index has not yet reversed to a column of X’s. However, it may be time to start thinking about putting new money to work.
Investors cannot invest directly in an index. Indexes have no fees. Past performance is not indicative of future results. Potential for profits is accompanied by possibility of loss.
