Dimensions Of Stock Highs And Lows

by David Jenyns on October 26, 2009

A stock may be high or low in relation to its own performance over a period of time, in relation to its category, or in relation to the market. A stock that is at its own yearly high must be judged for the possibility of going higher.

A stock near the high of a 10-point spread between high and low is likely to be less volatile than one near the high of a 50 or 60-point range. Obviously, stocks do not operate forever within predictable ranges. But an issue that has caught investors’ eyes, and has started to run ahead of itself, its group, and the market can be considered to have a future. Its high-low levels of the past can be viewed as less significant, and the investor’s effort can be bent toward determining how far the run will go.

The depressed issue usually offers a better possibility for improvement than the generally depressed group. The depressed market, like the depressed stock, often has great possibilities — if the investor can satisfy himself that he is getting in at an appropriately low level. The low of 1953 was a lovely opportunity.

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