What Is the Record High Percent?
A breadth measure based on new highs and lows is the Record High Percent.The quantity of equities setting new 52week highs is known as new highs.The quantity of equities that set new 52week lows is known as new lows.The number of new highs divided by the number of new highs plus new lows yields the indicator.New highs in relation to the total (new highs plus new lows) are displayed by this ratio.Record High Percent is a gauge of anindex’s underlying strength or weakness, much like all other breadth indicators.For a number of important indexes, StockCharts.com computes the Record High Percent.
Calculating the Record High Percent
{New Highs / (New Highs + New Lows)} x 100
Spreadsheet 1
The number of new highs in relation to the total (new highs + new lows) is displayed by the Record High Percent, as the formula suggests. To generate round values that range from 0 to 100, the sum is multiplied by 100. The following table lists several options based on an index of 100 equities, like the S&P 100 or Nasdaq 100. Almost never do all 100 stocks set a new high or low. More new lows than new highs are indicated by readings below 50 (50%) percent. More new highs than new lows are indicated by readings above 50 (50%) percent. A value of 0 means that there were no new 52-week highs. indicates there was at least 1 new high and no new lows (100% new highs). 50 indicates that new highs and new lows were equal and greater than zero (50% new highs and 50% new lows). This could be 4 new highs and 4 new lows or 20 new highs and 20 new lows. Rarely will there be a high number of new highs and new lows.
Record High Percent – Chart 1
Interpreting the Record High Percent
When the Record High Percent is above 50, indicating that new highs are greater than new lows, a stock index is generally considered strong (bullish). On the other hand, when the Record High Percent falls below 50, indicating that new lows are greater than new highs, the stock index is considered weak (bearish). When the underlying index is going either way, this indicator may move to its extremities and stay close to them. A strong upward trend is indicated by readings that are continuously above 70. A significant downward trend is indicated by readings that are continuously below 30. During choppy or corrective times, the Record High Percent might also fluctuate between zero and one hundred.
This figure may be misleading because Record High Percent indicates the proportion of new highs. An index might, for instance, have four new highs and one new low. That would be 80 {(4/(4+1))*100}, the Record High Percent. Four new highs isn’t that powerful, even though this reading seems impressive. Similarly, compared to broad-based indexes, Record High Percent based on stock indices with 100 or fewer stocks will experience extremes more frequently. Compared to the S&P 500, Nasdaq, and NYSE, the Record High Percent for the Nasdaq 100, S&P 100, and Dow Industrials will be more volatile a nd noisy.
Record High Percent – Chart 2
The Dow’s Record High Percent is displayed in red (bottom) on Chart 2, while the NYSE’s Record High Percent is displayed in blue. Observe how the Dow High-Low Index frequently reaches extremes. This is due to the fact that there are just thirty stocks and that they are readily distorted. The NYSE High-Low Index, on the other hand, is more consistent and stays mostly above 50 for the entire upward trend. The NYSE is not readily distorted and trades more than 3000 stocks every day. Broader indexes are generally more effective for breadth statistics.
Uptrend Transition
The NY Composite with the NYSE High-Low Index ($RHNYA) in 2009 is displayed in Chart 3. Here, we observe a Record High Percent amid a moment of transition, a period of correction, and a robust upward trend. The first is the time frame between a bear and a bull market, or a decline and an uptrend. The NY Composite recently recovered from a prolonged period of fall from October 2007 to March 2009. It will take a long advance before Record High Percent can produce many new highs. March, April, and May saw a spike in the NY Composite, however during this period, the Record High Percent varied from 0 to 90. In April and mid-May, there were two dives to the zero line. Because the Record High Percent generated higher lows, the mid-May to early-July period is considered a corrective period. Observe how the index held steady above both the May low and zero. The significant upward trend is the third period. Record High Percent (red) jumped to 100 following the June–July decline and stayed above 50 for the remainder of the year. Actually, until the conclusion of the year, the Record High Percent stayed mostly over 75. This demonstrated underlying power.
Record High Percent – Chart 3
The indicator window’s blue line represents the Record High Percent’s 21-day moving average. One month is approximately twenty-one days. Some of the extremes (above 90 or below 10) will be eliminated by using a moving average to smooth the Record High Percent. Additionally, the indicator will become less volatile and smoothed out by this moving average. Observe how the 21-day SMA stayed above 50 throughout the year after moving above it in late April. The 21-day SMA maintained above 50 to demonstrate ongoing strength in new highs despite the declines in May, June, and July.
Downtrend Transition
The Nasdaq’s Record High Percent (red) in 2007 and 2008 is displayed in Chart 4. In this case, the Record High Percent goes from optimistic to bearish before entering a significant decline. The 21-day SMA of Record High Percent (blue line) is also displayed because the daily measurements might be quite erratic. First, in August, the 21-day SMA fell below 25 (1). This occurred during what appeared to be a minor correction, but the indicator’s underlying weakness was exposed by the extension of new lows. The second caution occurred when the Record High Percent did not surpass 75 (2) and the Nasdaq reached a new high in late October 2007. A few weeks prior, the Record High Percent formed a bearish divergence at its top.When the 2day SMA fell below 50 in November and stayed below 50, it was the third and last straw (3). The Nasdaq equities’ underlying weakness was demonstrated by this extension of new lows.
Record High Percent – Chart 4
How can we predict when the 21-day SMA will cross the 50 mark and stay there? Although we may never be completely certain, we can utilize additional technical analysis techniques to support or contradict the indicator. Because new lows were spreading, the first two bearish signals in Record High Percent pointed to underlying weakness in Nasdaq equities. After the November 2007 decline, the Nasdaq bounced in December and formed lower highs (red arrows). The index then broke support to reverse the uptrend. This support break confirmed weakness that was already present in Record High Percent and its 21-day SMA. The 21-day SMA subsequently remained below 50 until April 2009.
Quirks
Strangeness Lagging indicators include both new 52-week highs and new 52-week lows. To put it another way, the market will alter course long before the quantity of new 52-week highs and lows experience a notable change. Consider it. Creating a new high or low takes at least 52 weeks. Consequently, a stock must make a significant rise in order to reach a 52-week milestone. Just as there are many new lows following a long collapse, there are also many new highs following a long climb. When a stock index corrects following a prolonged gain, new highs dry up.During a correction, some new lows will appear, but a significant increase in new lows requires a prolonged downturn. Similarly, when a stock index recovers from a prolonged downturn, new lows dry up. During this rebound, some new highs might appear, but a significant rise in new highs requires a prolonged gain.
Conclusions
Record High Percent is a breadth indicator specific to an underlying index. The NYSE Record High Percent pertains to the NY Composite, the Nasdaq 100 Record High Percent applies to the Nasdaq 100, and so on. Broad-based indices, such as the Nasdaq and NYSE, can be used as barometers for the “market”. The Record High Percent numbers for broad indices are not as easily swayed as the numbers for the Dow, Nasdaq 100 or S&P 100. In general, the bulls have an edge when Record High Percent for the Nasdaq and the NYSE are both above 50.
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