An Interesting Way to Look at 52-week Highs

by Babak, TradersNarrative.com

I tinker a lot with different market indicators and usually end up at a dead end. That’s no fun but I don’t consider the time spent on such fruitless endeavors as wasted because they are really mental calisthenics. Sometimes though, quite rarely, the result is interesting enough or useful enough that it is worth sharing with others.

Back when I was scribbling into the void, I started this blog with a wacky idea that combined two measures of the percentages of stocks above their moving averages: Timing the Market with Percent Above Moving Average Ratios. Yes, that is a mouthful. But it is also an interesting twist on the breadth indicator.

Most recently I’ve been fixated on the number of new 52-week highs in the market. Their significance is derived from their ability to signal a market turn well ahead of the actual top. Of course, this makes it both intriguing and infuriating because even if the number of new highs tops and declines, you don’t really know when exactly the market is going to crest. It could be right away or months in the future.

Read the rest of this story... at Trader's Narrative, March 25, 2010