What is a '52-Week High/Low'

A 52-week high/low is the highest and lowest price that a stock has traded at during the previous year. It is a technical indicator used by some traders and investors who view the 52-week high or low as an important factor in determining a stock's current value and predicting future price movement. As a stock trades within its 52-week price range (the range that exists between the 52-week low and the 52-week high), these investors may show increased interest as price nears either the high or the low.

BREAKING DOWN '52-Week High/Low'

One use for the 52-week high/low figure is to help determine an entry or exit point for a given stock. For example, stock traders may buy a stock when the price exceeds its 52-week high, or sell when the price falls below its 52-week low. The rationale behind this strategy is that if price breaks out from the 52-week range (either above or below), there is enough momentum to continue the price move in the same direction.

Determining the 52-Week High/Low

The 52-week high/low is based on the daily closing price for stocks or indexes. Often, a stock may actually breach a 52-week high intra-day, but end up closing below the previous 52-week high, thereby going unrecognized. The same applies when a stock makes a new 52-week low during a trading session but fails to close at a new 52-week low, going unrecognized. The cliché "If a tree falls in the woods and no one hears it, did it really fall?" applies. However, in these cases, the failure to make a new closing 52-week high/low can be very significant.

Intra-Day 52-Week High Reversals

A stock that makes a 52-week high intra-day but closes negative on the day may have topped out, meaning its price may not go much higher in the near term. Often, professionals and institutions use 52-week highs as profit stop levels to lock in gains. Although 52-week highs represent bullish sentiment, there are also plenty of investors prepared to give up some further price appreciation in order to lock in some or all of their gains. Stocks making new 52-week highs are often the most susceptible to profit taking, resulting in pullbacks and trend reversals.

Intra-Day 52-Week Low Reversals

When a stock makes a new 52-week low intra-day but fails to make a new closing 52-week low, it may be a sign of a bottom. This can be determined if it forms a daily hammer candlestick, which occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above or near its opening price. This can trigger short-sellers to start buying to cover their positions while bargain hunters come off the fence. Stocks that make five consecutive daily 52-week lows are most susceptible to seeing strong bounces when a daily hammer forms.

RELATED TERMS
  1. 52-Week Range

    The 52-week range shows the lowest and highest price at which ...
  2. Market Sentiment

    The overall attitude of investors toward a particular security ...
  3. Today's High

    Today's high refers to a security's intraday high trading price ...
  4. Today's Low

    Today's low is the lowest price at which a specific stock trades ...
  5. Market Breadth

    Market breadth is a technique used in technical analysis that ...
  6. Sentiment Indicator

    Sentiment indicator refers to a graphical or numerical indicator ...
Related Articles
  1. Investing

    3 Stocks Near Their 52-Week Lows

    Discover some stocks that are currently trading near their 52-week lows, which may be undervalued and offer a good buying opportunity for investors.
  2. Insurance

    7 Stocks That Could Surprise in 2016

    Here are seven stocks that could be good additions to your portfolio in 2016.
  3. Investing

    Steel Stocks Reach 52-Week Highs on Trump Rally (AKS, NUE)

    Several steel manufacturers soared to 52-week highs on Tuesday, as did the Market Vectors Steel ETF.
  4. Trading

    Stocks With Hammer Candlestick Patterns

    These four stocks may have reached their bottoms.
  5. Trading

    These Stocks Could Surge to New Highs (LVS, IR)

    These stocks are channeling just below 52-week highs. Watch for a breakout and a continuation of the uptrend.
  6. Trading

    2 Retail Stocks That Could Be Due for a Rebound

    A look at whether retail stocks could be due for a rebound after falling sharply so far this year.
  7. Investing

    Dissecting Alcoa Stock’s Post-Earnings Valuation

    Alcoa shares made yet another 52-week high Wednesday on its fourth quarter revenue beat and confident guidance.
  8. Investing

    Realty Income Misses on Earnings (O)

    Disappointing income and weak earnings give Realty Income investors a jolt.
  9. Investing

    Assessing Microsoft's Post-Earnings Valuation

    While the stock is at all-time highs, commercial cloud growth could make Microsoft shares a bargain.
RELATED FAQS
  1. What is the "percentage off the 52-week high or low"? How is this calculated?

    The "percentage off the 52-week high or low" refers to when a security's current price is relative to where it has traded ... Read Answer >>
  2. How should orders be placed when trying to buy a bounce on a stock?

    Buy stocks on a temporary pullback in price to acquire them at a price level that should be profitable when the stock resumes ... Read Answer >>
  3. How do I identify a stock that is under consolidation?

    Discover the three major characteristics stocks or securities exhibit when they are trading under a period of price consolidation. Read Answer >>
Hot Definitions
  1. Business Cycle

    The business cycle describes the rise and fall in production output of goods and services in an economy. Business cycles ...
  2. Futures Contract

    An agreement to buy or sell the underlying commodity or asset at a specific price at a future date.
  3. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  4. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  5. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  6. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
Trading Center