By Marco BösingWhat Is Market Breadth?
Market breadth is a concept in technical analysis that measures how broadly a market move is supported. Instead of looking only at the price of a stock index, breadth analysis examines how many of the index's constituent stocks are actually participating in the move.
An index can reach new highs while the majority of its stocks are already declining — that would be a negative breadth divergence. Such divergences between index performance and individual stock participation are considered early warning signals for potential trend reversals.
Common breadth indicators include the Advance-Decline Line, the Advance-Decline Difference (ADD), the percentage of stocks above their 200-day moving average, and new-highs-vs.-new-lows data. For intraday traders, the real-time market internals such as TICK, ADD, and VOLD are especially relevant.