Average true range (ATR) and being "stretched"
How far a stock travels in a normal session, counting overnight moves — and a way of measuring how far it has run from its own average in units of that normal travel.
Average true range answers a plain question: how much does this stock move in a day? For each session it takes the largest of three distances — the day's own high to low, the high to the previous close, and the low to the previous close — then averages that over the last 14 sessions. The last two clauses are what make it a "true" range rather than just the daily range. A company that closes at 100, is the subject of an announcement overnight and opens at 92 before trading quietly all day has had a very large day, and only a measure that looks back to the previous close records it as one.
The raw figure is in pounds or dollars, which makes it hard to compare between companies, so it is usually expressed as a percentage of the current price. Across the companies stocks-llm covers, the middle of the pack moves about 4% of its price in a typical session; the calmest few per cent move less than 2% and the jumpiest more than 8%. A high reading is not a warning and a low one is not a seal of quality — it describes how much a holding will swing about from day to day, in both directions, and it tends to be higher for smaller companies and for shares trading at a low price. One pattern is worth recognising: when a company agrees to be bought for cash, its shares pin themselves near the offer price and the daily range collapses to almost nothing, so some of the very calmest names on any such list are there because of a deal rather than because the business is steady.
The same measure gives a better way of asking whether a stock has run a long way. Comparing price with its 200-day moving average — the average close over roughly the past year — in percentage terms is misleading, because 15% above the average is ordinary for a volatile small company and remarkable for a utility. Measuring the distance in average true ranges instead puts every company on one scale: six daily ranges above the average means the same kind of stretch whoever it is. stocks-llm computes this nightly from delayed daily-close prices, split-adjusted. Two honest limits apply. A stretched reading describes where price sits today and is not a forecast that it will revert — shares can stay far from an average for months, and a durable re-rating looks exactly like this. And because the calculation divides by the daily range, companies whose range is under 1% of their price are left out of the stretch screens, since dividing by a very small number produces a very large multiple for reasons that have nothing to do with being stretched. Nothing here is advice.
See more terms in the stocks-llm glossary.
Informational only — NOT financial advice. This is an educational definition, not a recommendation to buy or sell anything. Metrics on stocks-llm are delayed data and may be missing or stale. Always verify information independently and consult a qualified financial professional before making any investment decision.