52-Week Low

52-Week Low

The 52-Week Low is a rolling count of the low of the stock over the past 52 weeks. This of course translates into the yearly low for the stock. Both fundamental analysts and technical analysts pay close attention to the 52-week low. This represents a bearish move in the stock. Some traders utilize a trading strategy where if a stock makes a new 52-week low, the stock should be sold. The assumption is that the stock will continue lower over the short-term and losses could accelerate. On the flip side, some speculators will use the 52-week low as a place to buy the stock. This is due to the fact that a test of a 52-week low will generally produce a news event, thus increasing the public’s fear of the stock. This increase distaste produces the necessary volume required in order for professional traders to be able to accumulate a large number of shares. Many large data providers such as Yahoo Finance and Bloomberg will provide a list of stocks that are making new 52-week low. Also, when looking at the overview of a stock, there will be a data field for 52-week low, in order for investors to see how close a stock is to this critical level. There are a number of market breadth indicators that use the 52-week low to gauge the strength of the market. The assumption is that the higher the number of stocks hitting 52-week lows, the more bearish the market. Some of the indicators that utilize the 52-week low are the cumulative new high/low line, new high/low ratio and the percentage of new highs to total market.

Tim Ord
Ord Oracle

Tim Ord is a technical analyst and expert in the theories of chart analysis using price, volume, and a host of proprietary indicators as a guide...

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