Hello, traders! We’re excited to announce the addition of some new data to our Market Breadth indicator: Net Highs and Lows. More details on this new data set after the jump!

Back in March, we released Market Breadth data onto the platform, and with that release, we offered this breakdown, which explained both how to add the data to your charts and the types of data available. Today, we take this offering a step further with the addition of ‘Net Highs and Lows’ and deeper data inclusion now starting on the daily chart from 2012.

What Are Net Highs And Lows?

Popularized by Matt Caruso, From Caruso Insights and a top US Investing performer, Net High and Low Market Breadth data shows the net number of stocks within any given list (S&P, Nasdaq Composite, Russell 2000, etc.) that are making new 52-week highs vs. new 52-week lows.  This is computed by taking the total number of stocks hitting 52-week highs and subtracting that value from the total number of stocks hitting 52-week lows.

Why Is This Data Useful?

The purpose of this particular data is simple: It is used to determine institutional and retail money flow into and out of stocks.  When net 52-week highs are increasing, this suggests that market participants are increasing their exposure to stocks. Inversely, increases in 52-week lows suggest just the opposite, that market participants are decreasing their exposure to stocks.

This gives us an understanding of the relative strength or weakness of markets at any given time. Different weighting methods can often distort the true picture of what the average stock is experiencing. With that in mind, it also helps to provide a visual representation of progress, up or down, which is helpful in that it provides focus to investors.

How Is This Data Used?

The most common way traders utilize Market Breadth data is to glean an understanding of the relative strength of the market, however, there are other ways it can be used.

Divergences

Take, for example, the chart in the image below; The daily chart of OXY. In the image, it’s clear that OXY managed to put in new highs almost perfectly in tandem with the S&P 500 putting in new net lows. This chart exhibits a clear pocket of strength during the weakest of times.

Risk-On / Risk-Off Identification

Another simple way of utilizing this new Market Breadth data is to assess risk-on and risk-off conditions. This can be done simply by observing where the current reading is in relation to the zero line. A risk-off environment is one in which the current reading is below the zero line and a risk-on environment is one in which the current reading is above the zero line.

If you’re interested in hearing exactly how Matt uses this indicator, he’s a clip of him discussing it at length!

With this added breadth type, we have also added Market Breadth data that now starts from 2012, visible by scrolling back on the Daily time frame. We hope you find this new data set useful, and if you have any questions, feel free to reach out to us via the ‘Contact Us’ button in the bottom right corner of your account.