What are stock indicators?

02/17/2023
What are stock indicators?
What are stock indicators?

Stock indicators or stock market indicators are technical indicators used by stock traders to predict the development of stock prices. They are then used to determine the right time to enter or exit a position. There are a number of stock market indicators; some are more reliable, others less so (e.g., the Bangladesh Butter Production Indicator, which is designed to predict the performance of the S&P 500 Index). Few, however, have stood the test of time. Of the most widely used, the NH-NL indicator, the TRIN indicator, the A/D indicator, and the MAS indicator are explained here.

The New High New Low indicator (NH-NL) is one of the most commonly used indicators among stock traders, as it helps to find the low and the high of the stock market, indicating the right time to buy or sell. It measures the number of stocks that have reached a new high (+) or low (-) in the past year and records them in a histogram. If there are more new highs (+) than new lows (-), a positive point is recorded on the histogram and vice versa. Large indexes such as the S&P 500 usually follow the trend of the indicator with some delay. So, if the NH-NL indicator shows a positive value on the histogram, but the major stock index is still in the red, the market has bottomed out and the investor can consider buying. Similarly, if the indicator shows negative values but the market index is still rising, the market has peaked. For a wise investor, this is a signal to possibly sell the stock.

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