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The Application of the New High/(New Highs + New Lows) Indicator to the Nasdaq Composite

The Application of the New High/(New Highs + New Lows) Indicator to the Nasdaq Composite
For whatever reason-and, no doubt, there might be many-timing models tend to produce better results when applied to theNasdaq Composite than when applied the New York Stock Exchange-related market indices, such as the Dow Industrials and the Standard &Poor’s 500 Index.
For one thing, over the years, the Nasdaq Composite has tended to be more trending (greater autocorrelation, the tendency of prices to move in the same direction as the price movement of the previous day) than indices such as the Standard & Poor’s 500, whose movements generally appear more random day by day Therefore, everytikg else being equal, there is likely to be better follow-through to buy and sell signals related to the Nasdaq Composite than to signals related to, for example, the Standard & Poor’s 500 Index.
For another thing, the Nasdaq Composite is generally more volatile (average higher absolute price movement over various periods) than the majority of New York Stock Exchange-based indices. As a rule, timing models tend to be more efficient when applied to volatile, trending vehicles than when applied to quieter, more randomly moving investment vehicles. Keep these observations in mind as we evaluate the application of the new highs/(new highs +new lows) timing model to the Nasdaq Composite. Also keep in mind that although we are tracking the Nasdaq Composite we are doing so via New York Stock Exchange-based new high/new low data.

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