Chartered Market Technician (CMT) Practice Exam 2025 – Your All-in-One Guide to Exam Success!

When more stocks are registering new lows than new highs in the New High-New Low Index, it typically indicates a negative market sentiment and weakness in the overall market. This phenomenon signals that a larger number of stocks are experiencing downward pressure, which can be interpreted as a bearish signal.

The New High-New Low Index is used to gauge market strength or weakness by comparing the number of stocks making new highs to those making new lows. When the index is negative and positioned below the centerline, it reflects a broader decline in stock prices, suggesting that market participants are experiencing more sell-offs than buy-ins. This downturn in stock valuations often correlates with weakening investor confidence and can foreshadow further declines in the market.

Thus, a negative index below the centerline reinforces the understanding of prevailing bearish conditions in the market, signaling to traders and investors that caution may be warranted in their strategies.