What is the Top-Low Index?
The high-low index compares stocks which may well be reaching their 52-week highs with stocks which may well be hitting their 52-week lows. The high-low index is used by patrons and patrons to verify the existing market building of a large market index, such for the reason that Standard and Poor’s 500 index (S&P 500).
Working out the Top-Low Index
The high-low index is only a 10-day moving reasonable of the report over the top percent indicator, which divides new highs by the use of new highs plus new lows. The report over the top percent indicator is calculated as follows:

get started{aligned} text{Record Top Percent} = frac{ text{New Highs} }{ text{New Highs} + text{New Lows} } events 100 end{aligned} Record Top Percent=New Highs+New LowsNew Highs​×100​
Consumers believe the high-low index to be bullish if it is positive and rising, and bearish if it is unfavorable and falling. Given that index may also be dangerous on a day-to-day basis, market technicians in most cases practice a moving reasonable on the wisdom to scrub out the daily swings. That is serving to generate additional loyal signals.
Decoding the Top-Low Index
A high-low index above 50 means additional stocks are reaching 52-week highs than reaching 52 lows. Conversely, a learning beneath 50 shows that additional stocks are making 52-week lows compared to stocks making 52-week highs. Because of this reality, patrons and patrons are in most cases bullish when the index rises above 50 and bearish when it declines beneath 50. Maximum steadily, readings above 70 indicate that {the marketplace} is trending higher, while a learning beneath 30 implies that {the marketplace} is in a downtrend. Consumers will have to moreover take into accout that If {the marketplace} is trending strongly, the high-low index can give over the top readings for a chronic length.
Purchasing and promoting with the Top-Low Index
Many patrons add a 20-day moving reasonable to the high-low index and use it as an indication line to enter a trade. The index generates a purchase order signal when it crosses above its moving reasonable, and a advertise signal when it crosses beneath its moving reasonable. Consumers will have to filter out the signals generated by the use of the high-low index with other technical indicators. As an example, a broker would in all probability require the relative energy index (RSI) to be above 0 when the index crosses above its 20-day moving reasonable to verify upward momentum.
The high-low index can be used to form a bullish or bearish bias. As an example, if the indicator is above 50, a broker would in all probability decide to trade on the long facet of {the marketplace} most effective.
