A stock or currency that is at its own yearly high must be judged for the possibility of going higher. It would quite possibly be a risky buy unless the upward momentum were pronounced and the indications of further progress were clear.
The width of the range also has a bearing. 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.
The implication is that if a stock can cruise upward through a range of 50 points, it can with equal ease slide that far downward. 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.
A stock at mid-range presumably has a demonstrated potential for achieving a higher level, but the course of its action should be plotted to see whether it is at mid-range through a series of small ups and downs, or whether mid-range is simply the current point of a downward slide