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Market breadth

  • By Active Trader Staff,
  • Active Trader Magazine
  • Technical Indicators
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Breadth is a term applied to data or calculations other than those based on price — most commonly, comparisons of the number of stocks rising vs. the number falling, but also sometimes incorporating volume. Breadth indicators are sometimes referred to as the market’s “internals” — implying they reflect internal strength or weakness that might not be evident directly in price — and many traders look to various market breadth tools to confirm or discredit the existing trend. Examples of breadth measurements include the number advancing vs. declining stocks, advancing vs. declining volume, new highs vs. new lows, and combinations of these data. Also, a number of derivative indicators have been developed using these numbers — various ratios, moving averages, and oscillators based on breadth data. Read on to learn more.

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Article copyright 2011 by Active Trader Magazine. Reprinted from the April 2010 issue with permission from Active Trader Magazine.

The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.

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