Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I think it is likely that you are referring to a technical market directional indicator discovered (invented) by Norm Fosback in the 1970s. It was originally called the “High Low Logic Index (HLLI)”. Since its introduction is has gone through several revisions and differing interpretations.
Fosback used to head an investment econometric research group and currently publishes a technically-based investment newsletter. He is a very dedicated and smart technical analyst who had a huge following over time. I am not a member of that cohort.
From memory, the HLLI was, in its simplest form, the sum of the daily highs plus the daily lows divided by the number of stocks traded that day. This ratio purportedly measured a divergent marketplace. Fosback used a 2.8 % tipping point to separate market direction (I distrust such an arbitrary and precise number). For him, percentages above that marker signaled a Bear market; values below that threshold signaled a Bull market condition.
Later, Fosback used cumulative moving averages of HLLI to gauge market sea changes. For example, he advocated 10 day averaging of the data, and sometimes recommended logarithmic averaging processes. Technical oriented traders are always prepared to modify their methods to better fit the data. You decide if that is worthy of trust in the formulations.
The HLLI indicator is still reported and used by market technicians. I’m told that it is reported daily by the highly respected Ned Davis organization.
I hope this helps just a little. It’s been a long time, but I believe what I have written is accurate.
Okay but then not quite sure how to use this metric. If you see the chart I linked, it doesn't seem to stay below the "40-line" much. Keeps zig zagging.
Now everyone accepts this is technical ANALysis. If it works, it is not because of logic, but only because of herd mentality. The only reason I linked this chart is because it seems to point to a situation where regardless of market having up days or down days if the number of 52 week lows is increasing, it may mean the health of the market is not good. This I feel is little different than moving average crossover or fibonacci crap which seem totally contrived.
Comments
I think it is likely that you are referring to a technical market directional indicator discovered (invented) by Norm Fosback in the 1970s. It was originally called the “High Low Logic Index (HLLI)”. Since its introduction is has gone through several revisions and differing interpretations.
Fosback used to head an investment econometric research group and currently publishes a technically-based investment newsletter. He is a very dedicated and smart technical analyst who had a huge following over time. I am not a member of that cohort.
From memory, the HLLI was, in its simplest form, the sum of the daily highs plus the daily lows divided by the number of stocks traded that day. This ratio purportedly measured a divergent marketplace. Fosback used a 2.8 % tipping point to separate market direction (I distrust such an arbitrary and precise number). For him, percentages above that marker signaled a Bear market; values below that threshold signaled a Bull market condition.
Later, Fosback used cumulative moving averages of HLLI to gauge market sea changes. For example, he advocated 10 day averaging of the data, and sometimes recommended logarithmic averaging processes. Technical oriented traders are always prepared to modify their methods to better fit the data. You decide if that is worthy of trust in the formulations.
The HLLI indicator is still reported and used by market technicians. I’m told that it is reported daily by the highly respected Ned Davis organization.
I hope this helps just a little. It’s been a long time, but I believe what I have written is accurate.
Best Wishes.
Now everyone accepts this is technical ANALysis. If it works, it is not because of logic, but only because of herd mentality. The only reason I linked this chart is because it seems to point to a situation where regardless of market having up days or down days if the number of 52 week lows is increasing, it may mean the health of the market is not good. This I feel is little different than moving average crossover or fibonacci crap which seem totally contrived.