Market breadth refers to the overall health and direction of a financial market or a specific stock exchange. It measures the extent to which a broad range of stocks or securities are participating in a market's movement. Market breadth indicators help investors and analysts assess the strength and sustainability of a market trend.
The two primary components of market breadth are advancing stocks and declining stocks. When the majority of stocks are rising (advancing), it indicates a positive market breadth, suggesting a strong and bullish market sentiment. Conversely, when the majority of stocks are falling (declining), it indicates a negative market breadth, suggesting a weak and bearish market sentiment.
Various market breadth indicators, such as the advance-decline line, the number of stocks making new highs or new lows, and the percentage of stocks above or below certain moving averages, are commonly used to gauge the market's overall health and potential future direction.
- 50% of Stocks greater than 300b Market cap are trading above their 20/50/200 Daily moving averages