# New Highs − New Lows Also known as: record-high percent. A Breadth, Sentiment & External Data concept (Breadth) in the LuxAlgo Library, with 1 indicator implementation. ## What is New Highs − New Lows? New Highs − New Lows (net new highs) is a breadth measure: each day, count the stocks in an exchange or index making fresh 52-week highs, subtract those making fresh 52-week lows, and plot the result. It answers a question a cap-weighted index cannot: how many individual names are strong enough to trade at [52-week extremes](https://www.luxalgo.com/library/concept/all-time-and-52-week-extremes/), and how many are breaking down. Sustained positive readings describe broad participation; sustained negative readings describe deterioration underneath the surface, whatever the index itself is doing. The raw daily series is noisy, so it is usually smoothed or transformed: a cumulative NH-NL line, a moving average, or the record high percent, which normalizes the count as new highs divided by the sum of new highs and new lows. Values also depend on the universe (NYSE, Nasdaq, S&P 500 constituents), so the same day can print different readings on different feeds. The measure has a long analytical lineage, including a famously contrarian branch. Norman Fosback's High-Low Logic Index takes the smaller of new highs and new lows as a fraction of issues traded: when both counts are large at once, the tape is split, strength and breakdown coexisting, which his work read as unhealthy. The Hindenburg Omen later stacked extra conditions on that split-market idea and acquired a doom-laden reputation its hit rate never earned. The durable insight is simpler: it matters not just whether highs outnumber lows, but whether the market can produce both in size simultaneously. Universe quirks are half the craft. The NYSE list includes closed-end bond funds, preferreds and other rate-sensitive issues, so rate shocks can swing its counts in ways that say little about common stocks; the Nasdaq list turns over quickly and skews young and speculative. Reading conventions follow from purpose: the 52-week window is the standard, shorter windows like 20 or 63 days give faster, noisier participation reads, and toolkits such as LuxAlgo's Market Breadth Toolkit compute the counts across selectable universes so the same logic travels between markets. ## How to identify NH-NL readings on a chart The construction is a count, but the meaning depends entirely on universe, window, and smoothing, so identification starts with those choices. 1. Fix the universe deliberately, NYSE, Nasdaq, or index constituents, and keep it constant; cross-feed comparisons are apples to oranges. 2. Fix the window: 52-week extremes are the convention; shorter windows trade significance for speed. 3. Compute the daily counts and the net; expect a jumpy series with occasional violent one-day spikes. 4. Smooth for signal: a 10-day average, a cumulative line, or the record high percent, each turning the raw count into something comparable over time. 5. Read it against price: expanding net new highs alongside index advances confirms; shrinking net new highs at fresh index highs warns; and both counts large at once flags a split tape. ## How traders use it - As trend confirmation: an index advance accompanied by expanding net new highs has broad sponsorship, while new index highs on shrinking net new highs is the classic warning of narrowing leadership, usually examined alongside [advance/decline internals](https://www.luxalgo.com/library/concept/advance-decline-internals/). - As a washout marker: spikes in new lows crowd into selloffs, and some traders watch for new lows to stop expanding while price makes a further low as early evidence that selling pressure is drying up. That is a tendency, not a rule. - In smoothed form: a cumulative NH-NL line or the record high percent turns a jumpy daily count into a slower gauge that can be compared with its own history or run through [breadth-thrust](https://www.luxalgo.com/library/concept/breadth-thrusts/) style threshold rules. - As a split-market warning: elevated new highs and new lows together, the High-Low Logic condition, flags a divided tape where rotation is violent underneath a calm index, historically a lower-quality environment for trend trades. - Paired across timescales: structural NH-NL context combined with a fast session gauge like the [TICK Index](https://www.luxalgo.com/library/concept/tick-index/) separates day-scale noise from genuine participation shifts. ## NH-NL vs other breadth gauges - **Advance/Decline Internals** (https://www.luxalgo.com/library/concept/advance-decline-internals/): A/D counts every stock's daily direction, so it moves fast and captures shallow participation. NH-NL only scores names at 52-week extremes, a much higher bar, making it slower and stickier. A/D asks who advanced today; NH-NL asks who is winning the whole year. - **% Stocks Above 20/50/200-day MA** (https://www.luxalgo.com/library/concept/percent-stocks-above-20-50-200-day-ma/): Percent-above-MA measures how much of the universe holds above a reference average, a graded participation read that mean-reverts with swings. NH-NL counts only the extremes of the distribution. The MA version tells you the middle of the tape; NH-NL tells you its tails. - **VIX** (https://www.luxalgo.com/library/concept/vix/): VIX prices index hedging demand from options; NH-NL counts actual stocks at actual extremes. One is a forward-looking price of fear, the other a backward-looking census of strength and damage. They disagree usefully: quiet VIX over deteriorating NH-NL is complacency with rot underneath. ## FAQ ### What is the record high percent? New highs divided by the sum of new highs and new lows, expressed from 0 to 100, so 50 means highs and lows are balanced. Normalizing this way removes the effect of how many issues trade in the universe, which changes over time. Analysts often smooth it with a short moving average before applying threshold rules. ### What does it mean when the index makes a high but net new highs shrink? Fewer individual stocks are strong enough to confirm the move, so leadership is narrowing. This kind of non-confirmation preceded some historical corrections, but lead times ranged from weeks to many months, and some divergences simply repaired as participation broadened again. Most practitioners treat it as a caution flag that still needs price confirmation, not as a sell signal. ### What is the High-Low Logic Index? Norman Fosback's split-market gauge: the lesser of new highs and new lows, divided by issues traded, usually smoothed. Low values are normal, one side dominating the other. High values mean the tape is producing many new highs and many new lows simultaneously, a divided market that his research read as bearish. The Hindenburg Omen builds extra trigger conditions on the same foundation, with a far noisier reputation. ### Why do NYSE and Nasdaq NH-NL readings disagree? Different universes. The NYSE roster carries closed-end bond funds, preferred shares and other rate-sensitive listings, so its counts can swing on interest-rate moves rather than equity health; the Nasdaq roster is younger, more speculative and turns over faster. Neither is wrong, they census different populations. Pick the universe that matches what you trade and keep it fixed. ### Is the daily NH-NL or the cumulative line more useful? They answer different questions. The cumulative line, adding each day's net, is read by slope and against its own moving average as a primary-trend gauge. The raw daily series and its short averages catch events: thrusts, washouts, split-market days. A common workflow uses the cumulative slope for regime and daily extremes for timing flags, with neither traded on its own. ### Can NH-NL breadth be applied to crypto? Mechanically yes: define a universe, say the top few hundred coins by liquidity, count fresh 52-week highs and lows, and net them. The caveats are heavier than in equities: the universe churns rapidly, survivorship distorts long windows, and data quality varies by venue. The participation logic still transfers, and a market leader rallying while net new highs shrink across the universe carries the same narrowing-leadership warning. ## Implementations in the Library - Market Breadth Toolkit (LuxAlgo): https://www.luxalgo.com/library/indicator/market-breadth-toolkit/ ## Related concepts - Advance/decline Internals: https://www.luxalgo.com/library/concept/advance-decline-internals/ - Up/down Volume: https://www.luxalgo.com/library/concept/up-down-volume/ - TICK Index: https://www.luxalgo.com/library/concept/tick-index/ - % Stocks Above 20/50/200-day MA: https://www.luxalgo.com/library/concept/percent-stocks-above-20-50-200-day-ma/ - Equal-weight vs Cap-weight Ratio: https://www.luxalgo.com/library/concept/equal-weight-vs-cap-weight-ratio/ - Participation Divergence at Index Highs: https://www.luxalgo.com/library/concept/participation-divergence-at-index-highs/ - TRIN: https://www.luxalgo.com/library/concept/trin/ - McClellan Oscillator: https://www.luxalgo.com/library/concept/mcclellan-oscillator/ - Breadth Thrusts: https://www.luxalgo.com/library/concept/breadth-thrusts/ - Sector Breadth: https://www.luxalgo.com/library/concept/sector-breadth/ --- Source: https://www.luxalgo.com/library/concept/new-highs-new-lows/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/