How to Gauge Market Sentiment with the NYSE Highs/Lows Line

08/18/2009 10:40 am EST

Focus: STRATEGIES

S. Wade Hansen

Co-Founder, Profiting with Forex (PFX) and Learning Markets

The NYSE Highs/Lows (H/L) Line is a market breadth indicator that compares the number of stocks on the New York Stock Exchange (NYSE) that are making new 52-week highs with the number of stocks that are making new 52-week lows.

What the NYSE Highs/Lows Line Tells Us

The NYSE Highs/Lows Line tells us one basic thing: Whether bullish or bearish sentiment is moving the stock market.

When more stocks on the NYSE are reaching new 52-week highs than are reaching new 52-week lows, the H/L Line moves higher. And when the H/L Line is moving higher, you know that bullish sentiment in the market is increasing.

When more stocks on the NYSE are reaching new 52-week lows than are reaching new 52-week highs, the H/L Line moves lower. And when the H/L Line is moving lower, you know that bearish sentiment in the market is increasing.

Watch the video now for more:

By S. Wade Hansen of LearningMarkets.com

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