Ian Woodward's Investing Blog

A High Five to my Greek friends and bloggers, Thrassos!:

Jay Robinson asked for a clarification on the New Highs and New Lows in the Comments section in “Where next for the Bear Market Rally” and I felt it would also be useful as a quick note here.

1.     Jay Robinson Says:
May 8th, 2008 at 6:02 am   edit

• Hi Ian, I think you’ve mentioned this before but there still seems to be a little confusion (probably on my part).When you say 150 new highs as in the following sentence:

• NH – NL – The New Highs versus New Lows are both semi-dormant, and until we see some measurable difference to the tune of at least 150 New Highs, this rally remains suspect in its conviction for the Bulls to show they have full confidence and have taken command.

• Do you mean in the NYSE alone or in the NYSE, NASDAQ and AMEX combined? I’m thinking you said in the past, the NYSE only but can’t really remember.

 2.     ian Says:
May 8th, 2008 at 9:40 am   edit Hi Jay: Thanks for asking about clearing up the NH – NL good stuff.

• All my work is done off the NYSE ONLY. This includes the Eureka, Hindenburg Omen, etc.

• Ideally one needs to see at least one day with the New Highs greater than 150. We had four days back on 4/16, 4/17, 4/18 and 4/21 when the readings were 109, 103, 118, and 106, respectively. I took that as “Close enough for Gov’t Work”.

• Likewise the New Lows have been Dormant with the highest number on 4/22 of 66 and mostly since then less than 30. That again to me was a good sign.

• The last two days the New Highs have perked up again with readings of 93 and 84…yes 84 yesterday, even though it was a bad day on the Market all around, compared to 32 New Lows. I wish I had seen that yesterday…that was a good sign.

• We need to see the New Highs go back up above 150 and stay up there for days on end for a truly strong Bull Rally.

• Now here’s the important point…New Lows can also rise, but we need to see NH -NL at least 60 apart consistently for the Bulls to have control.

• Lastly, when the New Lows begin to dominate, that is the time to look for a correction until the cycle starts all over again.

• Finally, keep an eye on Ron’s chart on this stuff in HGSI…the view is Hindenburg, NYSE New Highs, New Lows.  It will tell you all you need to know in one glance!

Best Regards, Ian.

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