High-Low Differential Index

 

Like the advance-decline line, the high-low indicators produce signals when they diverge from the action of the indices like the Dow Jones or the S&P 500. It is considered unhealthy for the market climate if the indices make new highs without many stocks reaching new highs at the same time. Chart technicians use various methods to spot divergences from the major market indices.

The High-Low Differential Index produces good longer term signals when it diverges from the action of the Dow over a prolonged period of time. Daily or weekly data may be used and the calculation of this indicator is very simple; just subtract the daily or weekly new lows from the new highs to get the differential and apply a moving average to smooth out the swings. If you have 479 new highs and 31 new lows on your first week, the reading of your newly created weekly High-Low Differential Index would be 448 (example below).

Date
Highs
Lows
Differential
10-week MA
09.06.95
479
31
448
16.06.95
371
42
329
23.06.95
491
56
435
30.06.95
292
42
250
07.07.95
485
29
456
14.07.95
635
36
599
21.07.95
331
50
281
28.07.95
464
43
421
04.08.95
402
42
360
11.08.95
337
47
290
387
18.08.95
338
53
285
371
25.08.95
336
46
290
367
01.09.95
397
50
347
358
08.09.95
530
31
499
383
15.09.95
664
43
621
399
 

 

 

TechnicalAnalysisSite.com - High-Low Differential Index

 

Dow Jones for comparison    S&P 500 for comparison   Home   Updated charts are available on WallStreetCourier.com

 

 

 
Past performance does not guarantee future results!
 
   
 


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