Norton High/Low Indicator
Categories: Metrics
It's easy to identify peaks and troughs in retrospect. A stock falls to $10 a share, then bounces back. By the time it's six months later and the stock is trading at $50, any doofus off the street can say, "Yep, that $10 was the low."
The Norton High/Low Indicator seeks to determine the peaks and troughs as they happen...a much more impressive feat. And like other attempts to pull off impressive feats (landing a rover on Mars, dating all three Olsen sisters at the same time), the process can get kind of complicated.
In summary form, the Norton High/Low Indicator uses another technical analysis tool called the Demand Index. Meanwhile, it also applies stochastics, a way of comparing a singular closing price with an overall price range. Using this basis, the Norton Indicator creates a line indicating a high (known as the NHP), and a line indicating a low (called the NLP).
Traders then watch price movements in relation to these guidelines. If the price crosses one of them, it could indicate a potential change in direction, thus pinpointing a high or a low.
