Direct Answer
Norman Fosback's indicator, commonly defined as a moving average of the smaller of two figures: new highs as a percent of issues traded, or new lows as a percent of issues traded. It is high only when both highs and lows are numerous. A rising reading means many stocks are making new highs and many are making new lows at the same time, which is interpreted as a market splitting in two directions and becoming unstable.
High-Low Logic Index: Formula, Meaning, Signals, Examples and How to Use It
How Is High-Low Logic Index Calculated?
Norman Fosback's indicator, commonly defined as a moving average of the smaller of two figures: new highs as a percent of issues traded, or new lows as a percent of issues traded. It is high only when both highs and lows are numerous.
Formula: Logic value = min(new highs, new lows) / issues traded x 100; Index = 10-day average of that value
Inputs:
- New 52-week highs each session
- New 52-week lows each session
- Total issues traded
- Smoothing length, commonly 10 sessions
Worked example. With 72 new highs, 18 new lows and 3,000 issues traded, the unsmoothed value is 0.60%. The inputs are illustrative numbers, not market data.
Reading it. A rising reading means many stocks are making new highs and many are making new lows at the same time, which is interpreted as a market splitting in two directions and becoming unstable. Low readings mean one of the two counts is small, which is normal in an orderly trend.
Limits. It is built on the idea that conflicting highs and lows warn of instability, which is a heuristic and not a rule. Interpretation of any threshold depends on the data source and the 52-week window.
What is High-Low Logic Index?
Norman Fosback's indicator, commonly defined as a moving average of the smaller of two figures: new highs as a percent of issues traded, or new lows as a percent of issues traded. It is high only when both highs and lows are numerous.
How to use High-Low Logic Index
A rising reading means many stocks are making new highs and many are making new lows at the same time, which is interpreted as a market splitting in two directions and becoming unstable. Low readings mean one of the two counts is small, which is normal in an orderly trend. A reading alone is never a buy or sell signal; it needs context from price structure, volume, volatility and the broader market regime.
Strengths
- Taking the smaller of highs and lows turns the reading on only when both are present, which targets a specific kind of mixed, conflicted tape.
- Dividing by issues traded puts the daily value in percent of the universe, so the series is less sensitive to the exchange listing more stocks.
- Reproducible when the formula and data convention are fixed.
Weaknesses and limitations
- Since the lower of the two counts is used, a day with 500 highs and 0 lows scores zero, so a strongly one-sided session is invisible to the index.
- The measure uses only the smaller count, so changes in the larger one produce no change in the reading until it falls below the other.
- Correlated indicators can create false confidence by repeating the same underlying information.
Editorial and risk note
This page is educational content, not individualized investment advice. It should not imply guaranteed prediction, accuracy or outperformance.
Frequently Asked Questions
Is High-Low Logic Index a buy or sell signal?
No. A rising reading means many stocks are making new highs and many are making new lows at the same time, which is interpreted as a market splitting in two directions and becoming unstable. It is built on the idea that conflicting highs and lows warn of instability, which is a heuristic and not a rule. A trade built on it still needs a trigger, an invalidation rule, a position size and realistic execution assumptions.
What is the best setting for High-Low Logic Index?
High-Low Logic Index takes these inputs: new 52-week highs each session; new 52-week lows each session; total issues traded. There is no universal best setting for the tunable ones, so test them across instruments, regimes and out-of-sample periods and favor stable parameter regions over one historical winner.
Can High-Low Logic Index be used by itself?
It is built on the idea that conflicting highs and lows warn of instability, which is a heuristic and not a rule. Interpretation of any threshold depends on the data source and the 52-week window. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone.
Does High-Low Logic Index work on every timeframe?
The calculation (Logic value = min(new highs, new lows) / issues traded x 100; Index = 10-day average of that value) can be run on any bar size, but behavior is not portable: a reading on a five-minute chart describes a very different market window from the same reading on a daily chart. Validate the exact timeframe before relying on it.
Why does High-Low Logic Index give false signals?
Since the lower of the two counts is used, a day with 500 highs and 0 lows scores zero, so a strongly one-sided session is invisible to the index. The measure uses only the smaller count, so changes in the larger one produce no change in the reading until it falls below the other. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated.
How should High-Low Logic Index be backtested?
Rebuild High-Low Logic Index from new 52-week highs each session using point-in-time data, write the rules before testing, include delisted securities where relevant, model realistic fills and costs, reserve a validation sample and compare with a simpler baseline.