What is a 52-Week High?
The 52-week high represents the highest prices at which a security, such as a stock, has traded in the past 52 weeks. It is a metric that investors use to examine the present price of a company and attempt to predict its future movements. If a company surpasses its 52-week high and continues to rise, this may signal to investors that certain factors have generated sufficient momentum to propel the price over the prior 52-week range. However, in a paper titled The 52-Week High and Momentum Investing (2004), George and Hwang found that “… traders are reluctant to bid the price of the stock higher even if the information warrants it.” Even though investors -may have a reason to push a stock’s price higher, behavioral biases may cause them to respond differently, but let’s save that for another blog.
-So why write a blog about the 52-week high? Recently we sought solutions to two questions that we were unable to find online or in the academic literature. First, what proportion of stocks today) are at (or near) 52-week highs? Secondly, what is the historical average for the number of stocks that are at (or near) their 52-week high? (The markets we chose will be discussed in the following section.)
How was the Dataset Created?
So, to find the answers to our questions, we first had to create a dataset to test! We used proprietary tools to collect 10 years (June 2013 – August 2022) of data for all stocks on the American Stock Exchange (AMEX), Nasdaq, The New York Stock Exchange (NYSE), and the Over the Counter (OTC) market. Having 10 years of data for each of these markets allowed us to use sophisticated data analysis tools to investigate answers to our questions. Our analysis allowed us to determine the overall 52-week high for each stock in our dataset and then compare the number of stocks that were within a defined percentage of their 52-week high. After we had the data on stocks relative to their historical 52-week highs, we could then evaluate the historical proportion at a market level.
The Fun Part, The Data!
It is now the moment everyone has been waiting for, the results! The results will be broken up into two tables.
The first table shows a summary by market for what percentage of stocks over the data set were within 5.00% of their 52-Week High. The second table shows the summary of each market for what percentage of stocks over the data set were within 50.00% of their 52-Week High.
Exchange | AMEX | NASDAQ | NYSE | OTC | All Markets | All Markets - OTC |
|---|---|---|---|---|---|---|
Average | 6.46% | 12.75% | 20.79% | 13.84% | 14.44% | 15.74% |
Standard Deviation | 3.69% | 6.60% | 10.86% | 6.22% | 6.93% | 7.92% |
Minimum | 0.49% | 1.01% | 0.53% | 1.46% | 1.15% | 0.94% |
Minimum Month | 2015-11-30 | 2018-11-30 | 2020-03-31 | 2020-03-31 | 2020-03-31 | 2020-03-31 |
Maximum | 16.67% | 34.11% | 46.93% | 27.47% | 33.16% | 38.12% |
Maximum Month | 2016-06-30 | 2013-09-30 | 2013-10-31 | 2013-10-31 | 2013-10-31 | 2013-10-31 |
Table One provides interesting insight into the topic:
- The 10-year market average is 14.44%. This means that over our 10 years of data, 14.44% of stocks were within 5% of their 52-week high.
- The highest percentage of stocks trading within 5% of their 52-week high was in October 2013, when 46.93% of shares traded on the NYSE were within 5% of their 52-week high.
- 4 out of the 6 markets had their lowest 52-Week High during Covid (March 2020)
- 5 out of the 6 markets experienced their highest 52-Week High in 2013
However, the data become quite intriguing when we look at the proportion of shares trading at or above 50% of their 52-week high.
Exchange | AMEX | NASDAQ | NYSE | OTC | All Markets | All Markets - OTC |
|---|---|---|---|---|---|---|
Average | 68.95% | 77.04% | 91.63% | 69.36% | 76.89% | 82.54% |
Standard Deviation | 10.11% | 9.52% | 6.96% | 6.16% | 7.53% | 8.21% |
Minimum | 39.75% | 48.91% | 58.53% | 46.76% | 52.17% | 55.01% |
Minimum Month | 2020-03-31 | 2022-06-30 | 2020-03-31 | 2020-03-31 | 2020-03-31 | 2020-03-31 |
Maximum | 87.56% | 92.37% | 98.92% | 79.97% | 89.01% | 94.87% |
Maximum Month | 2013-12-31 | 2013-12-31 | 2014-01-31 | 2013-12-31 | 2013-12-31 | 2013-12-31 |
Once you increase the bucket size to include 50.00%, Table Two shows the following:
- The 10- year market average is now 76.89%. That means 76.89% of stocks are within 50% of their 52-week high.
- The last time every market hit their maximum 52-week high was the last month of 2013 & first month of 2014 with the NYSE hitting 98.92%
- Nasdaq’s worst month was only two months ago (June 2022) while every other market’s worst month was March 2020 (COVID)
- 91.63% of companies on the NYSE on average are within 50.00% of their 52-Week High
Overall, having another metric like the 52-Week High is helpful when trying to understand the market and guide predictions of future price movements.