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New Highs/Lows Ratio (NYHL)
The NYHL measures the daily ratio between the number of stocks that approach new 52-week highs to the number that reach 52-week lows. The New Highs/Lows Ratio resembles the Advance/Decline Ratio and makes a useful oversold/overbought indicator for the market. Extremely high values sometimes mean that the market is becoming overbought. A sell-off, which often follows, makes prices fall. In the same manner, very low values can mean that the market is becoming oversold.
It is usually worth using it as a confirmation for other indicators than just generating entry/exit signals as it demonstrates only on a portion of the activity in the broad market.
You should use broad market indicators for trading against broad market indices through mutual funds, options, and futures. By adding confirmation or warning of upcoming trends, they can also be used to increase the effectiveness of more specific signals.