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New Highs vs New Lows

Updated Jun 23, 2026 at 8:47pm

Research Draft Medium 1,203 words

New Highs vs New Lows (NH-NL) is a market-breadth measure built from the daily count of stocks making fresh 52-week highs versus those making fresh 52-week lows on an exchange (typically the NYSE, Nasdaq, or AMEX) or within an index. Its premise is simple: a durable advance should be driven by broad participation — many issues pushing to new highs and very few collapsing to new lows. When an index keeps climbing but the roster of new highs thins while new lows quietly creep up, the move is being carried by a shrinking handful of leaders, and the internals are deteriorating beneath the surface. NH-NL is therefore a confirmation-and-divergence tool, not a standalone timing signal. It comes in three common forms — the raw differential, a percentage-based index, and a smoothed High-Low Index — each reading the same underlying data at a different altitude.

How it's calculated / formed

Three derived measures sit on top of the raw daily NH and NL counts:

  • Net New Highs (the differential): New Highs − New Lows. A simple oscillator around zero; positive readings mean expansion to new highs dominates, negative means new lows dominate. Often plotted as a cumulative line (similar in spirit to an A/D line).
  • Record High Percent (High-Low Percent): New Highs / (New Highs + New Lows) × 100 (StockCharts ChartSchool). This normalizes the two counts into a 0–100 ratio, so it is comparable across days regardless of total volume of signals. 50 is the neutral pivot (equal highs and lows).
  • High-Low Index: the 10-day SMA of Record High Percent (StockCharts). Smoothing strips the day-to-day noise from the volatile percentage and reveals the underlying breadth trend.

The raw NH/NL counts and net new highs are published by exchanges and by data vendors for the NYSE, Nasdaq, and AMEX; High-Low Percent is also computed for index/ETF universes such as the S&P 500, S&P 400, S&P 600, and the eleven sector SPDRs (StockCharts).

How to read it

For the High-Low Index / Record High Percent (StockCharts ChartSchool thresholds):

  • Above 50 → new highs outnumber new lows (bullish bias); below 50 → new lows dominate (bearish bias).
  • Consistently above 70 → usually coincides with a strong uptrend.
  • Consistently below 30 → usually coincides with a strong downtrend.
  • A signal-line cross (e.g. the High-Low Index crossing its own ~20-day SMA, per StockCharts) flags that new highs are expanding/contracting.

For the differential: a healthy advance is typically marked by net new highs that stay positive and expand; readers commonly want new highs to outnumber new lows by a wide multiple (StockCharts-affiliated commentary cites a roughly 4-to-10× ratio of names near highs vs near lows in a healthy uptrend — treat as a rule of thumb, not a hard threshold).

How it's used in practice

  • Trend confirmation. When the index makes a new high and net new highs are also expanding, participation is broad and the trend is internally healthy.
  • Bearish divergence (the most-watched use). Price prints a higher high but new highs shrink and/or new lows creep up — fewer stocks are participating, signaling narrowing leadership and a maturing or fragile advance. This is the breadth analog of the A/D-line divergence (see sibling node 001-advance-decline-line) and is generally read as a warning to tighten risk, not as an immediate sell.
  • Bullish divergence / washout. In a decline, new lows spiking then contracting even as price grinds lower can mark selling exhaustion.
  • Regime gauge. Persistent High-Low Index readings above ~70 or below ~30 help classify whether the tape is in a strong-trend regime at all.

Note these are internal-health reads. Style-specific operational mechanics (exact entries, stops, hold periods) belong to the Swing Trading branch, not here.

The Hindenburg Omen (and its honest track record)

The Hindenburg Omen is a crash-warning signal that keys off both new highs and new lows being elevated simultaneously — the logic being that under normal conditions a market sets many new highs or many new lows, but rarely both, so co-elevation implies an internally split, unstable market. It is attributed to Jim Miekka (popularized with Kennedy Gammage). StockCharts states the core conditions as: (1) the NYSE index is higher than 50 trading days ago (uptrend); (2) NYSE new 52-week highs and new 52-week lows each comprise at least ~2.8% of issues; (3) the McClellan Oscillator is negative. A widely cited additional filter requires that neither NH nor NL be more than twice the other (near-parity), and practitioners only treat the signal as serious when it clusters — multiple triggers within a ~30–36 trading-day window (StockCharts; SentimenTrader; RealInvestmentAdvice).

Be honest about its standing: the Hindenburg Omen has a poor real-world track record and is widely criticized. A single trigger is a false alarm the large majority of the time — StockCharts and other sources cite roughly a ~20–25% hit rate for a significant decline following a signal, i.e. ~75–80% false positives. Its defenders' "predicted nearly every crash since 1985" claim is a base-rate trap: it fires far more often than crashes occur, so it "cries wolf" and would have whipsawed anyone acting defensively on every signal (DayTrading.com; SentimenTrader; Wikipedia). It should be treated as, at best, a weak corroborating flag only when clustered — never as a reliable predictor and never as a standalone trade trigger.

Strengths & limitations

  • Strengths: directly measures participation breadth (hard for a few mega-caps to fake), simple and transparent, and divergences have a genuine track record as early warnings of narrowing leadership.
  • Limitations / failure modes: (1) It is lagging — the market typically turns before the NH/NL data shifts decisively (StockCharts). (2) Composition drift distorts the count: NYSE listings include many interest-rate-sensitive issues (closed-end funds, preferreds, REITs), so new-low spikes can reflect a rate move rather than equity weakness — a recognized weakness in NYSE-based Hindenburg readings. (3) The 52-week window is arbitrary; readings reset character around major anniversaries of big moves. (4) #1 misuse: treating a single divergence (or a single Hindenburg Omen) as a sell signal — divergences can persist for months, and the Omen's false-positive rate is high. Use NH-NL to describe internal health and size risk, not to call exact tops.

System relevance

Sits in the Market Breadth & Internals branch alongside 001-advance-decline-line, 003-mcclellan-oscillator-and-summation-index, 004-percent-above-moving-average-50-200, 005-breadth-thrusts-zweig, 006-trin-arms-index, and 007-up-down-volume. NH-NL and the High-Low Index are best read with these siblings (NH-NL confirms what the A/D line and % > 200-day MA also measure — broad participation). For Delvantic, this is a regime/health input: it informs whether an advance is broadly supported before a setup is trusted. The Hindenburg Omen, given its track record, should enter any downstream logic only as a low-weight, cluster-gated caveat — never as a primary signal. Swing-specific entry/stop mechanics are deferred to the Swing Trading branch.

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