The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines, Expanded Second Edition

Question 85—The Signals of NH-NL

Answer

1. C and E

2. A, B, and D

Divergences are more often seen at market tops, as the trend keeps rising out of inertia while its leadership becomes weaker. Spikes are much more common at stock market bottoms, where they identify zones of panic liquidation. Whenever NH-NL declines to several thousand below zero, a bottom is close at hand.