Market Breadth Indicators

Market breadth indicators count how many securities are taking part in a move rather than how far the index has moved: advancing against declining issues, new highs against new lows, the share of stocks above a moving average, and up volume against down volume. They are read for confirmation, when a rising index is carried by most of its members, and for divergence, when a rising index is carried by a few.

What do Market Breadth indicators have in common?

Every indicator in this category starts from the same observation: a capitalization-weighted index can rise while most of its members fall, because a handful of large stocks carry the average. Breadth measures the members directly, so it answers a question the index level cannot: how broad is this move? The raw material is the daily count of advancing, declining and unchanged issues on an exchange, the count of new 52-week highs and lows, the share of stocks above a chosen moving average, and the volume traded in advancing against declining issues.

The category divides by what it counts and how it accumulates. The advance/decline line, the advance/decline volume line and cumulative net new highs are running totals that show the trend of participation. The advance/decline ratio, the Arms Index and the high-low ratio are single-day readings that show the day's balance. The McClellan oscillator and summation index, breadth MACD, breadth RSI and the breadth momentum oscillator apply familiar smoothing and momentum arithmetic to a breadth series instead of a price series. The percent-above-moving-average family and the bullish percent index measure how many members are in their own uptrends, and the thrust indicators (Zweig breadth thrust, breadth thrust) look for a rapid swing from very few advancing issues to very many.

What they share is the reading rule. Breadth confirming price is the normal condition and carries little information on its own. Breadth diverging from price, with the index at a new high while fewer stocks advance or fewer make new highs, is the signal most of these indicators were built to detect, and it tends to appear weeks or months before the index turns rather than on the day.

How do you choose a Market Breadth indicator?

• Decide whether the question is trend or extreme: a cumulative line (advance/decline line, summation index) answers whether participation is widening or narrowing, while a bounded reading (percent above the 200-day average, bullish percent, Arms Index) answers whether participation is at a historical extreme
• Match the moving-average length to the horizon: the 20-day and 50-day percent-above readings turn with swings of a few weeks, the 200-day reading with the cycle
• Prefer the issue count for the cleanest signal and add the volume-based versions (advance/decline volume, up and down volume percentage) when the issue count and the index disagree, since volume shows where the money went
• Check the universe: NYSE breadth includes closed-end bond funds and preferreds that follow interest rates, so a breadth divergence there can be a bond signal rather than a stock signal; S&P 500 or sector breadth avoids that
• Use the thrust indicators sparingly; they fire a few times a decade and their value is in the rarity

Market Breadth indicators at a glance

Indicator	What it measures	How it is read
Absolute Breadth Index	The absolute value of the difference between advancing and declining issues for a session.	Large readings mean the market was strongly one-sided that day, up or down; small readings mean advances and declines were closely balanced.
Advance/Decline Difference	The net number of issues advancing for a period: advancing issues minus declining issues.	A positive value means more issues rose than fell and a negative value means the reverse; the size shows how broad the move was.
Advance/Decline Ratio	The number of advancing issues divided by the number of declining issues for a period.	A value above 1.0 means advancers outnumbered decliners and below 1.0 means the reverse.
Advance/Decline Volume Line	A cumulative line built by adding each session's net volume, up volume minus down volume, to a running total.	A rising line means volume is concentrating in advancing issues; a falling line means it is concentrating in declining issues.
Advance/Decline Volume Ratio	Total volume in advancing issues divided by total volume in declining issues for a session.	A ratio above 1.0 means more volume traded in advancing issues than in declining ones, and the higher it is the more one-sided the session.
Advancing Volume Percentage	The share of combined advancing and declining volume that traded in advancing issues.	Readings above 50 percent mean more volume went into advancers than decliners; values far above 50 show lopsided buying volume and values far below show lopsided selling volume.
Breadth Diffusion Index	The percentage of components in a group, such as the stocks in an index, that satisfy a positive condition, commonly a price above a moving average or a positive change over a set lookback.	Values above 50 percent mean most components are in a positive state and values below 50 percent mean most are not.
Breadth Divergence	A disagreement between a price index and a breadth measure, for example the index making a new high while an advance-decline line or a percentage-above-average series fails to.	A bearish divergence, where the index rises to a new high but breadth does not confirm, suggests fewer stocks are carrying the advance.
Breadth MACD	The moving average convergence divergence calculation applied to a breadth series, such as the advance-decline line or net advances, instead of to price.	A positive value means short-term breadth is running above its longer-term average and a negative value means it is below.
Breadth Momentum Oscillator	A momentum reading of a breadth series, commonly defined as the change in the advance-decline line or another breadth measure over a fixed number of periods.	Positive readings mean breadth has improved over the lookback and negative readings mean it has weakened.
Breadth RSI	Wilder's relative strength index calculated on a breadth series, such as the advance-decline line, instead of on price.	Readings above 50 mean gains in breadth have outweighed losses over the lookback.
Breadth Thrust	A rapid, unusually large increase in the share of stocks advancing within a short time, typically measured by a smoothed ratio of advancing issues to advancing plus declining issues.	A thrust is flagged when the smoothed ratio moves from a low level to a high level inside a short window, which indicates that buying was broad rather than led by a few names.
Bullish Percent Index	The percentage of stocks in an index or universe whose point and figure charts currently show a buy signal.	A reading near 50 percent means the universe is evenly split.
Cumulative Net New Highs	A running total of net new highs, the number of issues making new highs minus the number making new lows each session.	A rising line shows that new highs are outnumbering new lows day after day, and a falling line shows the opposite.
Cyclical vs Defensive Breadth	A comparison of breadth, such as the percent of stocks above their 50-day average, in cyclical sectors against the same measure in defensive sectors.	A positive spread means participation is broader among cyclical stocks, which is often associated with risk appetite; a negative spread means defensive groups are healthier.
Declining Volume Percentage	The share of combined advancing and declining volume that traded in declining issues.	Values above 50 percent mean most volume was in falling issues, and readings far above 50 show heavy selling participation.
Downside Volume Percentage	The share of total exchange volume that traded in issues closing lower.	A high share means the session's trading was concentrated in falling stocks, and very high values flag heavy selling pressure.
Equal-Weight vs Cap-Weight Relative Strength	The ratio of an equal-weight index to its capitalisation-weighted counterpart, such as an equal-weight S&P 500 to the S&P 500.	A rising ratio means the average stock is outperforming the largest names and participation is widening; a falling ratio means gains are concentrated in the mega-cap stocks.
High-Low Index	A 10-day average of the share of new highs among all new highs and new lows, sometimes called the record high percent.	Readings above 50 mean new highs outnumbered new lows over the period.
High-Low Logic Index	Norman Fosback's indicator, commonly defined as a moving average of the smaller of two figures: new highs as a percent of issues traded, or new lows as a percent of issues traded.	A rising reading means many stocks are making new highs and many are making new lows at the same time, which is interpreted as a market splitting in two directions and becoming unstable.
Industry Breadth	Breadth measured across industry groups instead of individual stocks, commonly the percent of industry groups trading above a moving average or with a positive return.	A high percentage means strength is broad across industries, while a low one means few groups are participating.
Market Participation Rate	The fraction of issues taking part in a market move, commonly the number of advancing issues divided by total issues traded.	A rate well above 50 percent shows that most issues joined the day's move and one well below 50 percent shows that most did not.
McClellan Summation Index	The running total of the McClellan Oscillator, which Sherman and Marian McClellan built from the difference between a 19-day and a 39-day exponential average of net advances.	The index rises while the oscillator is positive and falls while it is negative, so its slope tracks the persistence of net advances.
Net New Highs	The number of issues making new highs minus the number making new lows in one session.	Positive values mean leadership is expanding and negative values mean more stocks are breaking down than breaking out.
New High/New Low Line	A line plotting the cumulative sum of daily new highs minus new lows, commonly drawn beneath a price index.	An upward slope means new highs are consistently exceeding new lows and a downward slope means the opposite.
New High/New Low Ratio	The number of new highs divided by the number of new lows in a session.	A ratio above 1.0 means new highs outnumber new lows, and the higher it is the stronger the leadership.
Percent of Stocks Above 100-Day Moving Average	The percentage of stocks in an index or universe whose latest close is above their own 100-day moving average.	High values mean most stocks are in an intermediate-term uptrend and low values mean most are not.
Percent of Stocks Above 20-Day Moving Average	The percentage of stocks in an index or universe whose latest close is above their own 20-day moving average.	Because it reacts quickly, it swings widely, and very high or very low readings describe short-term stretch in the market.
Percent of Stocks Above 200-Day Moving Average	The percentage of stocks in an index or universe whose latest close is above their own 200-day moving average.	Readings above 50 percent mean most stocks are in long-term uptrends and readings below 50 percent mean most are not.
Percent of Stocks Above 50-Day Moving Average	The percentage of stocks in an index or universe whose latest close is above their own 50-day moving average.	High readings show broad intermediate-term strength and low readings show broad weakness.
Percent of Stocks Below 200-Day Moving Average	The percentage of stocks in an index or universe whose latest close is below their own 200-day moving average.	A high value means most stocks are in long-term downtrends and a falling value means the damage is being repaired.
Risk-On Breadth Composite	A custom composite that combines several breadth readings into one score.	Higher scores mean more of the underlying breadth measures are strong at the same time, and falling scores mean breadth is deteriorating.
Sector Breadth	Breadth counted across market sectors, commonly the percent of the 11 sectors whose index or ETF trades above a moving average, or has a positive return over a set period.	A high percentage means most sectors are trending up together, while a low one shows narrow leadership.
Small-Cap vs Large-Cap Breadth	A comparison of a breadth measure, such as the percent of stocks above their 200-day average or the advance-decline line, in small-cap stocks against the same measure in large caps.	A positive spread means participation is stronger among small caps, which is often associated with broad risk appetite; a negative spread means large caps are in better shape.
Up Volume/Down Volume Ratio	Total volume in rising issues divided by total volume in falling issues, usually taken over a multi-day window such as 10 sessions to cut the noise of single days.	A ratio above 1.0 means volume has been flowing mainly into rising issues over the window, and the higher it is the stronger the volume support.
Upside Volume Percentage	The share of total exchange volume that traded in issues closing higher.	A high share means buying concentrated in rising stocks, and a low one means little volume joined the advance.
Zweig Breadth Thrust	Martin Zweig's breadth indicator: a 10-day exponential average of the ratio of advancing issues to advancing plus declining issues on the NYSE.	The thrust signal means the share of advancing issues rose from depressed to overwhelming levels in a very short time, which analysts read as unusually broad buying.

Each row is the opening sentence of that indicator's own definition and reading, so the table says exactly what the profile says.

What limits do Market Breadth indicators share?

Breadth describes participation, not direction: a narrow advance can continue for a long time while the divergence persists, which is why a breadth signal is a warning to check other evidence rather than a sell order. The exchange-wide issue counts mix in interest-rate-sensitive funds and preferreds, the composition of every universe changes over the years so old extremes are not strictly comparable, and the capitalization-weighted index that breadth is compared with is itself the benchmark most investors hold, so a divergence can be right about the average stock and wrong about the portfolio.

Frequently Asked Questions

What is a market breadth indicator?

A market breadth indicator measures how many securities in a market or index are participating in a move: advancing against declining issues, new highs against new lows, the share of stocks above a moving average, or up volume against down volume. It describes the width of a move rather than its size.

What is a breadth divergence?

A breadth divergence is a new high in the index that is not matched by a new high in a breadth measure such as the advance/decline line or the count of new 52-week highs. It means the index is being carried by a shrinking group of stocks, and it has historically appeared weeks to months before major index peaks, though not before every peak.

Which breadth indicator is best for confirming a new uptrend?

The thrust indicators are built for that question: the Zweig breadth thrust fires when the ten-day average of advancing issues as a share of advancing plus declining issues moves from below 40 percent to above 61.5 percent within ten trading days, and the percent of stocks above their 50-day average moving from under 20 percent to over 80 percent is read the same way. Both are rare, which is what gives them meaning.

Does breadth work for a single sector or index?

Yes, provided the universe is large enough for a count to mean something: the percent of S&P 500 members above their 200-day average, sector breadth and industry breadth are all computed on a defined member list rather than on an exchange, which removes the bond-fund and preferred-stock noise from exchange-wide counts.