When both percentages of
new 52-week highs, and new 52-week lows, over the total number of stock issues
which are traded in the NYSE platform surpass 2.2% on a specific day, it
foreshadows a potential stock market crash.
The mechanism behind
this technical indicator is that traders and investors are very uncertain about
the market’s future movement. When this
splitting in the market reaches an abnormally high level, this phenomenon
usually leads to a market disaster.
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