Market Breadth
What It Is
Market breadth measures how many stocks are participating in a market move, showing whether an index’s rise or fall is broad‑based or concentrated.
Why It Matters
Strong breadth indicates healthy market trends, while weak breadth suggests fragility or reliance on a few large stocks.
How It Works
- Compares advancing vs declining stocks
- Tracks new highs vs new lows
- Uses indicators like the Advance‑Decline Line
- Helps confirm or contradict index movements
Key Components
- Advancers vs decliners
- Volume participation
- New highs and lows
- Breadth indicators
Example
If an index rises but most stocks decline, breadth is weak and the rally may not be sustainable.
Key Takeaways
- Breadth reveals underlying market strength.
- It helps identify trend reversals.
- Strong breadth supports long‑term rallies.